June 10, 2013 (TSR) – A new round of “adjustments” for the rare earth industry is planned by China’s Ministry of Industry and Information Technology.
A source from the ministry told the Chinese newspaper Economic Information Daily that a May 13th meeting held in the ministry between officials and “enterprise owners” discussed how to tackle the illegal mining and selling of rare earths.
The newspaper reported that the meeting also discussed raising taxes on rare earths mined in China.
In 2012, the Ministry of Industry and Information Technology cracked down on illegal rare earth miners and 20 related businesses by stopping production of about 30,000 metric tons of rare earths.
A new IHS Chemical global market research report released this week has revealed that pricing instability, growing demand and supply fears are now plaguing the rare earth sector. More than 100,000 metric tons of rare earths were produced and consumed last year. The Houston, Texas-based IHS Chemical forecast that average global demand for rare earth products will grow 7.6% annually until 2017, reaching more than 150,000 metric tons of consumption, with China leading consumption growth at 8.3% annually.
China accounted for more than 85% of global rare earth production last year, also accounting for 70% of global consumption. Japan followed with 15% of global production in 2012, but has no domestic rare earth reserves. Japan consumes two-thirds of China’s rare earth exports.
A large share of the world’s rare earth concentrate supply is produced as a by-product or co-product of other mining activities. Minerals containing rare earths are currently produced in seven nations or regions—China, the CIS, the United States, Australia, India, Brazil and Malaysia.
Lanthanum and cerium accounted for almost 60% of global consumption of rare earth oxides last year, followed by neodymium, yttrium, and praseodymium, said IHS Chemical. (Mineweb.com)
TSR BRIEFING ON CHINA’S ILLEGAL MINING AND SMUGGLING PROBLEM
Modern technology depends on rare earth metals, but their extraction is inflicting an all-too-common cost on shared resources. Rare earth metals, known as “industrial gold,” are still being illegally mined across the mountainous areas of Guangdong Province, despite a recent crackdown last year.
Guangdong is at the center of illegal mining of rare earth, which destroyed local environment and undermined revenue when smuggled to foreign countries. In order to curb the trend, seven rare earth producing cities in Guangdong signed a contract with the provincial government-backed Guangdong Rare Earth Industry Group on July 7, 2012 with one of the aims of protecting the precious resources.
It takes over three hours by coach to travel from Guangzhou, the capital city of Guangdong, to Xinfeng county in Shaoguan, known for its deposits of heavy rare earth metals. Shatian and Yaotian, the county’s chief towns, are notorious for their illegal mining. More than 30 illegal mining sites were found in February in the so-called “capital of the underground rare earth trade,” according to Guangzhou-based Nanfang Daily.
According to the report, illegal exploitation is an “open secret” in the area, and even local officials and farmers are involved.
Similar cases have not only happened in Guangdong, but also in adjacent Guangxi Zhuang Autonomous Region and Jiangxi and Fujian provinces, where illegal mining is rampant and officials and local villagers also take a share of the profit.
The cost of this business is low, at least for the participants. The resources were taken for free, no heed is paid to the environment, and the metals are easy to extract. And the prices on the market can be as high as 400,000 yuan ($62,720) a ton.
Eleven officials in Xinfeng were disciplined in May 2012, according to local media. So far, it is still unknown whether they were involved in the trade, or simply failed to root the problem out. But local people say at least some of them were personally involved.
Drug dealers in China can face a death penalty, but people involved in illegally mining rare earth are only sentenced to seven years in prison at most, according to the law.
There is a huge underground market for illegally mined rare earth metals and some enterprises buy rare earth metals at low prices without regard as to their origin.
China is facing pressure not only domestically but also from international buyers to produce low-cost rare earth metals.
Japan is typical. According to previous reports, Japan’s rare earth metal stockpiles could be used for several decades, but it still keeps asking China to export more.
In 2011, 56 percent of China’s rare earth exports were purchased by Japan. China’s rare earth reserves account for 23 percent of the world’s total, but over 90 percent of the world’s demand is supplied by China, according to a White Paper on Rare Earth Policy issued on June 20 by the State Council. Other countries closed their rare earth mines after being undercut by low-cost Chinese exports.
China should also improve technology to make products that use the metals instead of just selling resources (Extracted from: Global Times China)
NOt unlike rural USA, where the underground economy is probably larger than the taxed economy. The worse off the people get financially, the more likely they are to work “underground” and to find ways around paying taxes to a govt. many believe (rightly or wrongly) is legitimate and uncaring.