An alleged halt in rare earth element exports to Japan put world governments on notice. Did China push too hard, too fast?
Up until a recent territorial spat between Japan and China, most people probably knew little, if anything, about the 17 elements known collectively as rare earth metals. But news that China had halted exports of these metals to Japan at the height of a row over the detention of a Chinese fishing captain—and Japan’s subsequent capitulation over the issue—have underscored just how economically vital they are.
China has officially denied suspending exports to Japan, blaming instead stricter controls and overzealous Chinese suppliers. However, export quotas this year were 24,280 tons, down from 31,310 tons in 2009. And some reports have said there are more cuts to come, with officials suggesting that the need to check environmental degradation and a possible price collapse mean an additional 30 percent cut is necessary next year.
So why all the fuss? The problem is that China has gradually acquired more than a 90 percent share of the exports of these metals, which have proved to be a critical ingredient for green energy and high-tech products ranging from wind turbines and hybrid vehicles to mobile phones and guided missiles. Their importance stems in large part from the fact that in many industries, there’s currently no viable substitute.
Ironically, many of the rare earth metals—divided into rare earth elements (LREE) such as cerium and neodymium, and heavy rare earth elements (HREE) such as terbium, dysprosium and yttrium—aren’t actually all that rare. There are also significant rare earth deposits in Australia, India, Mongolia, Namibia, Thailand and the United States. The problem is that there’s little profit in rare earth mining unless it’s combined with downstream processes such as alloy processing.
And this is where China has stepped in. Lax environmental controls, unorganized labour, subsidies and a lack of oversight have allowed China to secure about 95 percent of global exports, despite the country holding only about 37 percent of the world’s deposits.
In many respects this shouldn’t have come as such a surprise. After all, Deng Xiaoping set the agenda almost 20 years ago when he stated that rare earths will be for China what oil was for Saudi Arabia. Soon after these remarks, China began to flood North American markets with cheap rare earth oxides both light and heavy. By 2002, Mountain Pass in the United States—which only a decade prior had stood as the world’s largest producer of rare earths—was shut down.
Today, a single mine at Bayan Obo in Inner Mongolia produces about 50 percent of the world’s rare earths, mostly LREE. The rare earths produced here are a by-product and are therefore particularly cost effective by industry standards. Most of the world’s HREE, meanwhile, come from lateritic ion adsorption clays located in Southern China.These clay-based deposits don’t require the cracking of the complex mineralogy that characterizes bedrock deposits found in other parts of the world.
Photo Credit: Steven Milne
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joe white
China get bullied all the time and whatever good China want to do is demonised. Why is there a need to get China’s neighbours to stand up to China when China is not bullying anyone. China is better as a friend than an enemy. Do not push her to the corner. China too can give the West a headache just by being friendly to North Korea, Iran,Afghanistan, Russia etc. China instead accomodates the West and the daily demonisng of China by Western medias and governments are not healthy. What if China turns around and start talking about the whole sale killing of native Indians. Tien An Aen was a bad incident which China is not proud of. The government was provoked for weeks and soldiers abused to a point where it was out of out of control. Now one of the trouble maker/traitor wins a nobel prize. Isn’t this uncalled for. Most
Chinese like to emulate americans. Give them a chance to change. They are in a transition period.
jflys
Joe, as you know, we all love the Chinese in the US. The people we are the closet to get the worst criticism; the absolute of which we save for fellow Americans who hold opposing political beliefs.
John Chan
In order to put rare earth in maximum utilization, China should ask all rare earth importers to provide end user certificates with justification of amount required. Since rare earth is a high tech product, China should ask reciprocal treatment from all nations importing rare earth from China, such as Japan, the US and the EU must remove investment barriers to their high tech industries.
mareo2
“Did China Overplay Rare Earth Hand?” Most likely, but like their another phirric “victory” the ’79 Sino-Vietnamese war, they are going to denay that they commited any mistake.
KenH
yang zi, you are so right!
harry
China has been exporting rare earth uncontrollably, its about time they restrict it. China is moving away from cheap labour economy and into high tech economy includes new materials and new form of eneregy which all needs rare earth.
John
The timing and direction of restrictions was highly coincidental, if nothing else this raised questions.
Plus, you are correct. China is acting in its interests. These interests may not align with other countries or businesses and they need to take these into account when considering stability.
Thus they will source and create new producers or de-monopolise the sources they have.
Its common sense.
“this is a reality that China must adjust to. the world has too many petty people”. Considering China claims to have approx a quarter of them, then many of them must reside in China as statistics would probably show.
China as the hard done by nation is a good sell domestically but does get tiring listening too by the international community. (just my 10 cents worth).
yang zi
The fuss about rare earth is all manipulation and misinformation by rare earth importers in Japan and some media. China’s export quota is well known long time ago and it is running out. the export control by China is economically and strategically beneficial to western nations, especially US, by stimulating rare earth industry in US and other parts of the world.
So even when China does a good thing, it is thought by some as having bad intentions. this is a reality that China must adjust to. the world has too many petty people