Analysis and Suggestion to the Development of the Rare Earth Industry in China   

By Liu Aison

China's rare earth resource dominates other countries. The rare earth industry is also an emerging industry worldwide. Rare earth material is a strategic advanced material in the 21st century and plays an important role in the renovation of traditional industries and the development of high-tech industries. The development of the rare earth industry including resource development and utilization, technical research and industrial restructuring has therefore received great attention from the Chinese central government, which helped the rare earth industry in China develop from scratch, make growth and achieve significant successes.

Present status of China's rare earth industry

Rare earth resources in China feature great reserves, wide distribution and complete variety. Basic reserves amount to around 89.0 million tons (based on rare earth oxides), accounting for 59% of world total basic reserves according to relevant international statistics. Recoverable resources amount to 67.8 million tons, accounting for around 55% of world total. The rare earth products that are exported by China account for around 80% of the total rare earth demand in the world. China's export amount of rare earth products after smelting and separation was 34 600 tons in 2008. Yet, China's rare earth industry has many problems today. For example, there are more than 100 rare earth enterprises, the processing capacity of rare earth concentrates is close to 200 000 t/a and the smelting and separation capacity of rare earths is more than 160 000 t/a. The total demand for rare earths in the world is however only 100 000 tons a year. Moreover, China holds more than a half of rare earth resources in the world, but has failed to completely own the right to the pricing of rare earth products. The prices of rare earths have dropped in recent years. Major four reasons for the situation are as follows:

1. China's capacity of rare earth smelting and separation is in surplus. The output and the sales are in serious imbalance and the total supply amount is out of control. Owing to their unique atomic structures and outstanding functions in optical, electrical and magnetic properties, rare earth elements have gained extensive applications in various economic sectors. The demand for rare earths in the world, developed countries in particular, is also increasing constantly. In the past 40 years China has made many major breakthroughs in technologies related to rare earths such as mining, dressing, separation and extraction. There are rich rare earth resources in China and the investment needed in the rare earth production is also small. Quite a few companies have therefore regarded the founding of rare earth producers as a shortcut to make profit. Resultant serious blind investment and low-level redundant construction have led to excess production, oversupply, price downslide and slashing, vicious competition among domestic enterprises.

2. Enterprises' modes in production, operation and management are rough and the product mix in the whole sector is irrational. The combined scale of the rare earth industry in China is quite big, but the scale of individual enterprises is small and technologies and equipment are outdated and incomplete. The transformation and the commercialization of research achievements are lagging behind. Some rare earth production process technologies in China are quite advanced in the world, but the matched equipment is at a lower level.
   Among the rare earth products made in China, raw material varieties and medium and low-grade varieties hold a considerable proportion. There are few refined varieties with high added value. The technical level and the added value of rare earth derivative materials and products are relatively low. China owns few patented technologies with intellectual property right in rare earth application products. The exports are therefore restricted and competitiveness in the international market is weak.

3. Environmental pollution and resource wastes are serious. Waste water, waste gases and waste residues discharged by many rare earth companies in China fail to meet emission standards defined by the state. Moreover, although China now has advantages in rare earth resources, statistics report shows that due to irrational mining the two biggest rare earth mines in Baotou of Inner Mongolia where is China's biggest rare earth reserve region can only be mined for 42 years at the present mining rate, the rare earth mines in Sichuan province can only have mining for around 30 years at an annual mining rate of 15 000 tons and the ionic rare earth mines in Jiangxi province can only have mining for 8-10 years. It can be seen that it is imminent to protect rare earth resources.

4. Compared with other countries, the rare earth application technologies in China are relatively inadequate. There are many tracking and imitation technologies. Development and application are lagging behind the production and the ability of technical innovation is poor. China has made quite a few breakthroughs in the research and development of rare earth applications. For example, remarkable achievements have been made in the application of rare earth metals in iron/steel, nonferrous metal, petrochemical, glass, ceramic, light industry, textile and agricultural sectors. Nevertheless, most rare earth application technologies, especially application technologies in advanced materials such as permanent magnet materials, luminescent materials, hydrogen storage materials, superconducting materials, refined ceramic materials and bioengineering materials, have little independent innovation and few intellectual property rights. There is a considerable gap in rare earth application technologies between China and developed countries. Economic benefits of the rare earth industry in China do not match large amounts of resources.

Countermeasures and suggestions

Rare earth resources are short in supply worldwide and China must conduct protective mining. Measures should be taken to avoid waste and damage of resources and pollution to environment. The Chinese government should manage regularly the mining permits, make a rational planning of output and increase the utilization rate of resources. It should disseminate the new in-situ leaching process technology with good environmental protection and high resource utilization rate, make further improvements to the process and enforce nationwide prospecting of rare earth resources.
   International competitiveness of China's rare earth industry should be enhanced through alliance and merge among enterprises. Expansion with low cost and rational distribution of production means should be achieved through alliance and merge to enhance competitiveness of the rare earth industry in the international market.
   China's rare earth enterprises should try their best to upgrade industrial qualifications. First of all, they should continue to make use of advanced applied technologies to renovate existing production process and equipment, upgrade production level and solve problems in environmental pollution, energy conservation, emission reduction and imports substitution. Secondly, they should conduct technical research according to the requirements of the national economy and high-tech sectors on rare earth new materials and narrow the gap with developed countries. Thirdly, they should conduct research and development in key fields such as comprehensive utilization of resources, renewal and recycle, environmental protection and mine safety.
   It is suggested that based on the present status in the production of rare earths in China and the market of rare earth products both at home and abroad the Ministr