Writing in The Diplomat back in November 2010, Saurav Jha posed the question of whether China had overplayed its rare earth hand.
The question was prompted by a series of events triggered by the Japanese interception of a Chinese fishing vessel by two Japan Coast Guard ships and the subsequent political row as China demanded the return of the captain of the vessel who was detained after the Chinese boat rammed one of the Japanese ships.
As part of its diplomatic pressure on Tokyo, Beijing appeared to halt exports of so-called rare earth metals – a resource vital to many of Japan’s high-tech industries – prompting alarm among some of the many other countries that rely on China for the actually not-so-rare metals. At the time, China claimed that it hadn’t directed exports to be halted, suggesting that it was a spontaneous decision by all its exporters. Few were convinced, and the Chinese move was followed by a round of deals among other nations and much media speculation about a possible Chinese stranglehold on other nations’ economies and even national security.
To be fair to China, there had already been warnings over the environmental toll that illegal mining of rare earth metals was taking, and the government warned that it was tightening up on such activity, adding that it was this crackdown, and not exploitation of its virtual monopoly, that was driving its cuts in export quotas.
Fast forward more than 18 months, and the New York Times notes that there has been a “plunge in world prices for rare earths in the past year as a speculative mania has subsided.” But will an announcement by China this week change things up again?
In a policy paper, Chinese officials warned a decline in its rare earth reserves in some mining areas was “accelerating.”
“The Chinese government exercises strict control over the total volume of rare earth smelting and separation, and will not approve any new rare earth smelting and separation projects except for those state-sanctioned projects of merger and reorganization and for distribution optimum. Existing rare earth smelting and separation projects are prohibited from expanding their scale of production,” the paper noted.
“In view of the needs of protecting the environment and resources and developing in a sustainable way, and after giving overall considerations to the domestic and international markets, the carrying capacity of resources and environment, as well as domestic production conditions, China strictly controls the total volumes of rare earth mining and production, and takes restrictive measures on the mining, production, consumption and export of rare earth products simultaneously,” it also said.
So how serious is the environmental threat facing China as a result of rare earth mining? I asked Nicholas Leadbeater, a rare earth specialist at the University of Connecticut, for his view on the dangers.
“I would say that the issue with rare earth mining is that the rare earth metals are in fact not all that rare, but they are found in small concentrations in ore and often found alongside things like uranium. Extraction of the rare earths from the ore is energy intensive and requires high temperatures as well as often needing significant quantities of hazardous chemicals like concentrated sulfuric acid,” he told me. “The extraction process results in a lot of waste, some of it radioactive due to the uranium and other radioactive elements in the ore alongside the rare earths. In addition to this are the other environmental and health concerns of mining large areas for ore.”
So, with this in mind, what does the future hold? According to Leadbeater, it’s “becoming increasingly obvious that, while rare earths are used in many ‘environmentally friendly’ applications such as hybrid cars, the supply of the key rare earths isn’t sustainable on a long term basis.”
This means, he says, that industry is looking for alternatives to the rare earth components, “be this a complete redesign of their technology or else a way to make components more efficient,” and so reducing the amount of rare earth required.
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Rye
The largest rare earth reserve mine in the world is in California, USA.
John Chan
@Rye,
It just proves how irresponsible and selfish the American are; they are forcing China to carry the environmental pollution burden for the American.
China should sue the American in the WTO for not allowing China to invest in the exploration of rare earth reserve in the USA.
Lin KaiJie
"The extraction process results in a lot of waste, some of it radioactive due to the uranium and other radioactive elements in the ore alongside the rare earths."
Just to clarify: uranium isn't really radioactive. Plutonium is highly radioactive, but you can hold Uranium in your hand.
harry
China should ban rear Earth export to all those countries who have put ban on selling weapons to China.
Godaveri
Hi Harry,
If China can do that, then Europe and US will stop importing your other crap which is roughly 65% of your exports, China will collapse like a house of cards and no more surplus for China. US , Africa and Australia has lots reare earth metals. China is dependent on the rest of the world and vice versa, it is not that simple everthing is linked.
Lung Sha Shou
This is the sort of self serving, exceptionalist garbage that so often comes out of Beijing. To anyone with a half-decent intellect it can both be seen for what it is AND yet another example of breathtaking arrogance – China doesn't want to play by the rules whenever it can avoid them (YET they will happily whine and bleat about others not doing so.)
The article contains NON ARGUMENTS and lacks basic logic while illustrating the ingrained self-centred attitude of Beijing. Typical of this is that they "finds it perplexing that after steadily appreciating the renminbi by nearly 40 percent in real terms since 2005, (that) critics say that the renminbi is still undervalued by the same 20 percent or more as if nothing has happened over the past five years." The renminbi was grossly undervalued, it may have been deliberately appreciated by 40% via their control of it but this certainly does not mean it is not STILL grossly undervalued The fact that some critics say it is 20% undervalued does not make their criticism in anyway wrong – the author is trying to trap people into drawing the conclusion that because the same figures are still being cited even after their upward manipulation that they must have it wrong. This is garbage as many things influence a currency, some upwards some downwards; one factor may change (appreciation) whilst the rest can also change. All it means is China hasn't done enough and their currency is appreciating in value, which of course it would. The argument and the author are dishonest.
The entire issue of the appropriateness of central control of their currency is conveniently avoided. The massive damage done to other countries is conveniently avoided as the implications are unpleasant and might lead to people questioning the fairness of it in the world economic system. More harm is done to the economies of other countries by this single factor than is sometimes seen in the deliberate destruction of large wars.
His patronising description of protectionist sentiments in the US is laughable and typical of Chinese hypocrisy – China demands 51% ownership of foreign ventures and stipulates that intellectual property must be fully shared with the Chinese "partners" owners. The forced transfer of Billions (Trillions?) of dollars worth of intellectual property is the result. Can you imagine the HOWLS and the WHINESE if China were subject to this treatment elsewhere? – Far better for them to whine about the Boxer rebellion and the Opium wars instead of behaving like a responsible and fair nation.
China is always ready to point the finger at others and cite the less than perfect record of other countries whilst doing whatever it likes or behaving totally contrary to those same values it is invoking to criticise others.
China never wants to play by the rules when it means they might suffer a disadvantage, and advances whatever argument it can to get try and rationalise it. They always want others to play by the rules when it suits them. Of course it is the nature of people and countries to seek advantage but China is remarkable for it shameless manipulation of the rules (and its currency), with hypocrisy a hallmark of its arguments in so many areas. If and when China is the worlds largest economy I believe they will still bleat on about their being a developing country and therefore entitled to special treatment.
Much of their shallow rhetoric involves their carefully nursed resentment about the so-called century of humiliation. The racist treatment of the colonising countries would rightly be deplored by any decent human being however racism and anti-western sentiment is nurtured and encouraged in China for political ends. Better the nationalist hawks have someone external to hate than consider the innumerable outrages and injustices done to the Chinese people by their dishonest criminal government. (I am such a radical I think that the forced abortion of women who are 8 months pregnant is a revolting crime and top level officials lying about it is indicative of a sick and evil regime.)
Torture and murder of Buddhist monks sanction at the top level – indeed forming "proof of national pride" (?!) forms part of the route to power and trust by the military – essential pre-requisites for high office – Hu Jintao got to the top only after he had commission criminal repression in Tibet.
Chinese detest racism when they are on the receiving end – don't believe for a minute that they actually have a set of values that involves rejecting racism. The reaction of 99% of Chinese to hearing that their child had a Negro partner would be that of disgust and outrage however they know that Westerners are supposed to disavow racist ideas completely and can be made to feel guilty easily so they bleat on about the crimes of the past whilst being contemptuous and hateful today. Some morons for example talk of "predatory imperialist Westpac" (?!) countries beating up on China who must stand up and teach them a lesson (as China only wants peace and harmony for all) but fail to recognise or see the crimes of the criminal regime.
Chinese love to study the pre-occupations of the "politically correct" Western citizenry and their governments and identify areas which are "pressure points" or likely to meet with some sympathy and then endlessly go on about them – theatrically overreacting to "train" their opponents to avoid certain topics or regard them as no-go areas – it is the acme of skill – to win without fighting.
Its time people actually looked at China with the same standards and the same scrutiny as other Countries. Whatever happens with China will, of necessity be or more import simply by virtue of their size. Empires come and go but an Empire and concentration of economic and military power of one fifth of the world's population (1.4/7) has never been seen. Once it happens it will not change because of outside forces as did many. The US may think it won WWII (no) and Cold War (yes) but if the Dictatorial, Inhuman, totalitarian regime of the "Communist" party remains in charge the world should take steps to preserve freedom, which while imperfect and hard to define, is lacking for those under their boot.
The hypocrisy and excpetionalism of the author is a key instrument of their rising influence which should be seen for what it is.
mareo2
"… So, with this in mind, what does the future hold?.."
Asian countries challenge China on rare earth minerals
By Matt McGrath
Science reporter, BBC World Service
http://www.bbc.co.uk/news/science-environment-18508692
"…Vietnam and Japan have opened a centre for research into rare earth minerals to challenge China's monopoly of supply…"
"…Tim Worstall is a senior fellow at the Adam Smith Institute and an expert in rare earth minerals.
"What's happening with Vietnam and Japan is not in itself a decisive change but it is a symptom of other things going on in the market which are changing the supply from China to non-Chinese sources."…"
"…But according to Tim Worstall, there is another important aspect to China's move that in some ways explains the Japanese interest in forming an alliance with Vietnam.
"What China is said to be doing is reducing the exports so that the people who add the value and produce the expensive pieces of equipment move their production into China, that's something that some people are not happy to do," he explained.
"That's really the background to the Japanese and Vietnamese tie up, yes it gives them an alternative source from China but also gives them a source that's happy to ship them the raw materials rather than ask them to move into their country."
Meaning that the CCP's explanation seems to be pure "BS".
"…Rare no longer
And in Vietnam there are now projects underway in several countries to improve the exploitation of rare elements that are still crucial for the manufacture of batteries, magnets, mobile phones and other devices.
"There's no shortage of rare earth ore at all and there won't be for several centuries at minimum," Tim Worstall told BBC News.
"There is a shortage of the processing capacity to turn those ores into the individual rare elements but that is also being addressed.
Several commentators expect that in the next few years, the current shortage of the elements will become a glut. Tim Worstall says that the situation is about to change dramatically.
"I can think of three specific projects that I know that are financed and in the next two to three years will supply about 40% of the world market. I think the whole question becomes irrelevant as we get more non-Chinese supplies."
Let's repeat for make sure that the answer is clear:
"…the whole question becomes irrelevant as we get more non-Chinese supplies…"
peter
This all good. More world wide production so that there is less reliant on China for rare earths. China welcomes this. Let the Japanese pollute the Vietnam environment.
China does not enjoy nor seek a monopoly in rare earths. As China becomes affluent, environmental issues become relevant. Let the next country down the economic ladder take the burden. The more the better.
peter
Professor Leadbeater hits it on the spot! What an appropriate name, Leadbeater.
The world media trying to protray China's concern for environmental degradation by unlicensed miners, who smuggled out the minerals through Vietnam, etc. shows how bias the medias are. The fact that rare earths are not so rare at all re-states the fact that other countries are letting China carry the burdens of exploitation.
With increasing wealth, comes environmental concerns. China has reached that point and the public awareness of pollution put pressures on the government to improve which it is doing in the area of water resources, air pollution, etc.
What is even more laugable is the suggestion that China is doing it to ramp up the prices of rare earths. What is the total revenue China derives from rare eath exports? A mere pittance compare to China's foreign reserves of $3 Trillion and an annual trade surplus of at least $100 Billion.
As the old Chinese proverbs "when you are rich, life is more valuable". Chinese lives are at stake here.
shen liang
Yes, I'm afraid that's precisely the problem in China.
When you are rich life is considered more valuable, which is why the rich people's lives are almost always the only priority in China today. In other cases life is considered worth no more than ash.
Push a Chinese proverb far enough and it will let you see more than cliches. Pretending the Chinese government is concerned about the dire environmental conditions they created is a joke, and a poor one at that.