China Partially Opens up Rare Earth Sector

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As one of the main exporters of rare-earth metals in the world, china plans to take some measures to increase the value-added of its rare earth industry.

At the beginning of August, the Ministry of Industry and Information Technology (MIIT) said that a series of measures would be taken to increase the level of China’s rare earth industry.

“Bad news for small and middle-sized enterprises, but good news for large ones,” said an official from the MIIT.

The MIIT issued the document named the Policy about the Rare Earth Industry (hereafter the Document), based on which the relevant measures are formed and taken. It is said that the document will come out soon.

According to the Draft of the Policy about the Rare Earth Industry (hereafter the Draft) which was said to “contain most of the contents of the final version”, the Chinese government will exert stricter supervision and management over the rare earth industry and promote the industrial integration. “The situation will be changed.”

Systematic Management

“This will be an unprecedented management policy over the rare earth industry,” said the source. “The Document will be the guiding principle for the development of Chinese rare earth industry in the future.”

It is known that the Document will be divided into ten chapters, covering the fields of resources, smelting and separation, application, investment and so on.

“It’s more like a conclusion of the existing policies and rules. What’s different is that the Document is much more detailed,” said the source mentioned above.

The Chinese State Council (cabinet) is studying on establishing a system which is led by the MIIT and focuses on the multilevel management over the rare earth industry. Different government departments play different roles and they work together to form a systematic management structure.

Higher Threshold

In order to exalt the level of China’s rare earth industry, the MIIT plans to set up higher threshold for the new comers and eliminate the enterprises with laggard equipments, technology and management.

The MIIT will unite with the Ministry of National Land and Resources on the management of the rare earth mines. In the field of rare earth smelting and separation, detailed specifications have been given out. For example, the production capacity of the rare earth smelting and separation enterprises in Baotou should be more than 8,000 tons a year; the bastnasite smelting and separation enterprises in Sichuan should increase their production capacity to 5,000 tons a year.

The Document also included the requirements for environmental protection, especially on the emission of waste gas, water and slag. “The recovery coefficient of turning concentrate ores to mixed rare earth should be larger than 92%; the recovery coefficient of extracting single rare earth from mixed rare earth is required to be larger than 95%.”

In addition, all the newly built mines or smelting factories should be reported to the MIIT for approval.

The mergers and acquisitions of the enterprises in the rare earth industry are also encouraged. The current industrial structure featuring small size, scattered distribution and disorderly management should be changed.

On August 9, the MIIT said that it will promote the integrations and restructurings of the rare earth enterprises in a market-oriented way. The basic principle is that the large enterprises with certain strength in capital and technology can get more resources and enjoy more favorable conditions.

Limitation and Encouragement for Foreigners

In August, there came the rumor that China will stop exporting the rare earth resources, which caused the worries about the development of high-tech industry and military industry.

At the beginning of September, the MIIT denied that the exportation of rare earth will be stopped. The exports amount of two kinds of rare earth will be reduced. Besides, 20% higher exports duty will be imposed on some rare earth products.

But there are some policies concerning the foreign investors in China’s rare earth industry. First of all, the foreign companies are forbidden to invest into the rare earth mines, no matter in joint venture or exclusively-owned company. However, the foreign investors are encouraged to invest in the rare earth smelting and separation. What’s noticeable is that the foreigners can only make investments through joint venture with a Chinese company. The exclusively-owned companies in rare earth smelting and separation can not be established in China.

In addition, the government will try to import the advanced technology in rare earth smelting and separation. Therefore the companies with technological advantage are encouraged to set a joint venture with the domestics companies, to help China improve the industrial structure of its rare earth industry.