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China should curb rare earth exports and excessive mining
Global Times | August 25, 2011 04:11
By Wang Zhongmei
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Both the US and European countries have recently criticized China's clamp down on rare earth metal exports after the Chinese Ministry of Land and Resources established new restrictions earlier this month as part of an effort to better regulate heavy polluting industries.

However, because China's rare earth mining sector remains in an immature and unscrupulous stage of development, I would argue that the country should continue restricting exports, as well as excessive exploitation, of rare earth metals for the sake of its own national interest, despite pressure from other major economies around the world.

As a crucial raw material for a wide range of high-tech products, including hard drives, solar panels and hybrid automobiles, rare earth metals have become a strategic resource for most developed countries. China, with its rich rare earth resources, has become the supplier for these countries over the last few decades. It controls no less than 95 percent of global production of rare earth metals. According to Xinhua News Agency, China's exports of rare earth metals have risen tenfold over the last 20 years.

Rocketing exports have turned rare earth metals into a big business in the country. And local governments and mining companies each have a big stake in the industry. This makes regulation difficult. The local government is unlikely to either restrict rare earth mining or establish tougher regulations on discharging waste and pollutants because they are afraid of losing tax revenue and other benefits from the industry. Under the relaxed regulatory environment, miners have been allowed to plunder domestic rare earth metal resources and export them abroad.

Although China supplies the vast majority of the world's rare earth metals, the country currently only has 30 percent of the world's reserves. That wasn't always the case. In the early 1990s, China had 85 percent of global reserves, but decades of excessive exploitation have decimated those resources. If domestic miners are allowed to continue exploiting and exporting rare earth metals unhindered, the resource will be gone in 20 or 30 years.

Some rare earth importers, such as Australia and the US, have their vast reserves of rare earth metals. But rather than exploit their own resources, they have taken advantage of profit-driven Chinese miners subject to less restrictive regulations in order to import massive amounts of rare earth metals to boost their own stockpiles.

Excessive exploitation has brought on other problems as well. Because China's mining and processing technologies remain immature, private mining companies waste large quantities of the metals by bringing them out of the ground and preparing them for sale. In addition, environmentally unsound mining practices have contaminated nearby water tables and arable land with radioactive elements, much to the detriment of people who live there.

Although China has created policies to restrict rare earth metal exports, including dropping a 20-year-old regime of export incentives, irresponsible exploitation remain rampant across the country.

To tackle these problems, regulators should pay more attention to limiting rare earth mining rights and forcing the industry to consolidate, as opposed to just limiting exports. More importantly, it ought to strengthen the environmental penalties for rare earth miners.

The author is an associate research professor at the Institute of World Economy at the Shanghai Academy of Social Sciences.

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