China and rare earths — more developments
“We have not enough influence on rare metal in the world and we didn’t get reasonable profit” – Qinhua Wang, Vice-chairman of the China Non-Ferrous Metals Industry Association, speaking in 2014.
That quote was included (as a wake-up call) in a paper written a couple of months ago for the London-based Royal Society of Chemistry by David Abraham, director of the Technology, Rare and Electronic Materials Centre in Washington, DC. Abrahams’ comments, and some new developments this week, add evidence to the strong case made here in InvestorIntel this week by Jack Lifton: that, essentially, China wants to maintain its rare earth hegemony.
This week we have seen:
- Fears expressed from South Korea that China could disrupt REE supplies if it takes offence to Seoul’s latest defence policies.
- News that China is planning to upgrade REE technology.
- And there are plans for a new crackdown on illegal mining in China.
The point made by Abraham recently was that “while the rest of the world is trying to figure out how to use fewer rare earth materials, China seeks ways to use more”. It is a key point; as China has increased its production of rare earths, innovation in its rare earth industry has evolved, while in the U.S. it has fallen. Abraham makes the very good point that the rare earth market is also at the heart of the Chinese government’s “Made in China 2025” strategy, a plan that focuses on developing green and high tech industries in China. He concludes by saying that anyone who thinks China’s is about to willingly let slip control over rare earths should reflect on the words of Quinhua Wang.
The Korea Times reports this week that Seoul is worried that China may retaliate economically to South Korea’s decision to deploy a U.S. radar system capable of penetrating into Chinese territory. The newspaper noted that Beijing has stopped exports of REE to Japan in 2010 over a territorial dispute.
Then there were two items in China Daily this week.
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One quoted Wang Zhonghe, party chief of Baotou in Inner Mongolia, saying the city had set itself the goal of developing “more comprehensive deep processing” of REE to add value. He said by 2017 the city would become the biggest rare earths hydrogen storage and technological research and development base. He complained that China had received poor prices for exporting its rare earths (presumably referring to recent years, not the 2011 bonanza).
A REE transformation fund has so far backed 22 projects, including
- Industrialization of high-performance REE magnets;
- Rare earth hydrogen storage;
- Rare earth polishing powder;
- Rare earths for magnetic resonance imaging devices;
- Magnetic refrigeration, and
- Batteries for new-energy vehicles.
China Daily also published a report from Xinhua saying that, in the 13th Five-Year Plan (2016-2020), the country would be cracking down on illegal mining, processing and sales of rare earths. Now, we have heard this before but dare we assume that the continuing low prices for these elements may finally have concentrated a few minds in Beijing and/or stirred the mining companies in urging more action?
Xinhua reports that government agencies would enhance co-operation, increase inspections and “take a zero-tolerance” approach toward illegal REE mining.
Zhou Changyi, head of the Department of Raw Materials, part of the Ministry of Industry and Information Technology, said the next few years would be an “important period for the overhaul of China’s rare earth industry”, another piece of evidence that China is earnest about boosting this sector.
Here’s an interesting fact in the report: during the 12th Five-Year Plan, 14 illegal REE mines were closed and 28 companies put out of business. More than 36,000 tonnes of REE were seized and fines totaling 230 million yuan ($34.53 million) were imposed.
Meanwhile, back in the mainstream media
No, the passage in italics below was not written back in 2010 when the media was discovering rare earths and trying to (a) understand it themselves and (b) then explain it to their readers or viewers. No, this is a recent blog on the website of the prestigious Foreign Policy magazine:
“Yttrium and praseodymium don’t exactly roll off the tongue, but they’re part of what make smartphones so small, powerful, and bright. These exotic materials are among the planet’s 17 rare-earth elements, and surprisingly, the soft, silvery metals are not at all rare. But they’re found in tiny concentrations, all mixed together, and usually embedded in hard rock, which makes them difficult — and messy — to isolate. In China, which mines 89 percent of global output, toxic wastes from rare-earth facilities have poisoned water, ruined farmlands, and made people sick.”
Give me strength. And on in went in similar vein: about all the technologies that use REE, how China cut off supplies to Japan in 2010, and the problems with illegal mining.
This is a worry: it seems that knowledge of, and discussion about, rare earths and the geopolitical ramifications of Chinese control and lack of Western production, is still confined to a small number of people and websites such as InvestorIntel.
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