Dobrescu, Emilian M. (2023), Chinese Hegemony in Production of Rare Earths, Intelligence Info, 2:3, 61-68, https://www.intelligenceinfo.org/chinese-hegemony-in-the-production-of-rare-earths/
Abstract
Until 1948, most of the rare earth elements (REE) were sourced from sand deposits in India and Brazil. Through the 1950s, South Africa took the status as the worlds’ rare earth elements source. Through the last decade of the 21st century and the first decade of this century, the demand of REE has constantly increased whereas the prices remained low due to Chinese production expansion and exports. In 2006 the Chinese Ministry of Commerce stated that the country’s REE deposits reduced by 37% between 1996 and 2003.
Keywords: rare earth elements, rare earths, China, hegemony, United States
Hegemonia chineză în producția de pământuri rare
Rezumat
Până în 1948, majoritatea elementelor pământurilor rare (REE) proveneau din zăcăminte de nisip din India și Brazilia. Prin anii 1950, Africa de Sud a luat statutul de sursă de elemente de pământuri rare din lume. În ultimul deceniu al secolului al XXI-lea și în primul deceniu al acestui secol, cererea de REE a crescut constant, în timp ce prețurile au rămas scăzute datorită expansiunii producției și exporturilor chineze. În 2006, Ministerul de Comerț chinez a declarat că depozitele de REE ale țării s-au redus cu 37% între 1996 și 2003.
Cuvinte cheie: elemente ale pământurilor rare, pământuri rare, China, hegemonie, Statele Unite ale Americii
INTELLIGENCE INFO, Volumul 2, Numărul 3, Septembrie 2023, pp. 61-68
ISSN 2821 – 8159, ISSN – L 2821 – 8159
URL: https://www.intelligenceinfo.org/chinese-hegemony-in-the-production-of-rare-earths/
© 2023 Emilian M. Dobrescu. Responsabilitatea conținutului, interpretărilor și opiniilor exprimate revine exclusiv autorilor.
Chinese Hegemony in the Production of Rare Earths
Dr. Emilian M. Dobrescu[1]
dobrescu@acad.ro
[1] Romanian Academy of Scientists
Until 1948, most of the rare earth elements (REE) were sourced from sand deposits in India and Brazil. Through the 1950s, South Africa took the status as the worlds’ rare earth elements source, after large veins of REE were discovered – monazite in the locality of Steenkampskraal.
Through the last decade of the 21st century and the first decade of this century, the demand of REE has constantly increased whereas the prices remained low due to Chinese production expansion and exports. In the beginning of the 2000s, the Indian and Brazilian mines were producing most of the world’s rare earths headings, but they were gradually outclassed by the Chinese production, which, by 2010, was providing 95% of the rare earths’ world supply[1]. The USA and Australia hold strategic reserves (12% and 3% respectively, of the global deposits), yet they stopped their exploitation due to China’s[2] competitive prices and concerns on environmental pollution.[3]
Source: Wikipedia, visited on July 18th 2012, 6:52
For the Western countries, which try to improve their supply, such situation has become even of greater concern as on September 1, 2009, China announced plans to reduce its export quota to 35,000 tons per year starting 2010, from a total production of 130.000 tons. The argument to justify such decision refers to the wish to conserve scarce resources and protect the environment, which has become affected by the exploitation of the rare earths’ deposits.
In 2006 the Chinese Ministry of Commerce stated that the country’s REE deposits reduced by 37% between 1996 and 2003[4]. Actually, the measures China announced in September 1, 2009 were set in order to meet the growing internal demand. During 2006-2010, China reduced its export quota by 5-10% per year and the production was slightly limited in order to protect the precious metals from over-exploitation in 15 years[5]. Nevertheless, in the previous decade, China took over the REE extraction world industry.
All of the world’s REE range comes from Chinese rare earths sources, such as Bayan Obo great deposits, in the District of Bayiun, Province of Inner Mongolia. Rare earths can also be found on the Tibetan Plateau. The command of the Chinese army over the High Plateau of Tibet carries immense farming exploitations and large cattle growing farms, sells wood, builds roads and railways, prospects and exploits mineral deposits: gold, uranium, nonferrous metals, rare metals. Illegal mines are spread in the Chinese Plain, and their exploitation often leads to waters and environmental pollution.
According to Gregoire Macqueron, China supplies 96% (other researchers speak about 97%) of the global production resulted from these raw materials, which it controls, against some harsh reactions of the industrialized countries (see next chapter), in a strict manner (by means of export quotas and taxes) in order to protect its own industry[6].
In the January 2011 edition, Beijing Review wrote: « we have become world leaders because we tolerate a quick and expensive exploitation »[7]. From 1978 to 1989, the Chinese REE production increased by 40% per year[8]. In the mining field of Bayan Obo, the state’s enterprise Baotou Iron & Steel en Baotou Rare Earths controls the largest rare earths mine in the world; it comprises a highly performing mining and raw metals treatment plans. However, alongside state’s enterprises, hundreds of private companies proliferated; in Jiangxi there were 1.035 at a certain time. Such operations source a true nightmare on the environment, and the lack of efficient control from the Chinese State allowed the Western consumers to buy rare earths at very low prices.
After 2006, the Chinese authorities imposed export quota for the rare earth elements, so that the gradually increased exports are not exceeded (see chart 4, in Annexes). Several parameters lead to such:
- REE shall, preferably, feed the Chinese Industry, which is constantly growing;
- The mining sector and the heavy industry are matters to be subjected to radical drainage. In 2010, nearly 1.600 mines considered as being dangerous, expensive and technologically outdated, have been closed. Approximately 100 such mines and illegal antimony furnaces[9] could be found in the Hunan Province. The rare earths extraction mines have also become subject to this process;
- The REE sector has been reduced to around 5 or 6 states enterprises. By 2015, the number of enterprises to extract REE shall reduce from 90 to 25[10]. Thus, China intends to end the anarchic despoliation of its deposits that would have been depleted in 35 years, had the extractions continued in such manner[11].
China is expecting a better price for the REE on the world market. It intends to return to the situation that prevailed during 1998-2005, when the REE exports multiplied by 10, and the prices dropped by 36%[12]. Per se, today’s China is producing just about the entire REE oxides quantity used worldwide – 139.000 tons in 2008 and over 200.000 de tons in 2009. Keeping this trend, in 2010, China was producing a quarter billion tons of rare earths, intensely required and used in the top technology worldwide!
The mines and the surrounding regions falling under the heading of Baiyan Obo are regarded as being of national strategic importance and are constantly surveyed by police squads. The ore is conveyed from a 200 m depth, where the mining crater is, by Terex trucks, the largest in China, 2 storied building high, which can transport up to 168 tons of REE containing rock at a time; four shifts of drivers ensure the operation of trucks 24/7.
The REE exploitation of Bayan Obo lead to total annihilation of the local environment and ecosystem, and transformed the area in an industrial area which provides an apocalyptical view. The refineries can be found 150 km from Bayan Obo, in the low valleys, north-west of the mining city, in the industrial outskirts of the city of Baotou, in different stages of functioning. They are surrounded by partially frozen 10 km wide lakes, impregnated with the red trails of the acids. The surrounding area is marked for many years from now by the refineries poisonous wastes. The soil is filled with ditches and trenches. Some of the villages were relocated due to intense pollution.
At an isolated processing factory in the Chinese province Inner Mongolia, called He Jiao Mu Qu, approx. 50 km south of Bayan Obo, the sulphuric acid is boiling, erupting in the crevasses. The largest discharge lake of Baogang, with a surface of 11 sq m, is full of toxic waste. The toxic air, filled with sulphur, stings the eyes and burns the lungs, and the workers’ clothes are full of acid burns. At the end of some centrifugal steel pipes, several furnaces boil some kind of yellowish lava. Under such inhuman circumstances the wage of a single worker is of 1.600 Chinese Yuan per month, the equivalent of approx. 220 US dollars. The Bayan Obo ecological decimation caused by the extraction of REE is of epic proportions.
Currently, in China, the products based on REE are being used in more than 30 industrial areas, and their development and use has become the main growing pole, of the Chinese and global rare earths.
The games of WTO
The change of the Chinese policy regarding its massive REE exports started to alarm Western countries, which showed concern in respect of their supply with such strategic materials. In September 2010, a double hit occurs:
- Japan arrests a Chinese fishing ship, which apparently was fishing in its territorial waters, but it soon finds out that the its REE shipments are blocked in the harbors of China. Next, Japan accuses China to have deliberately interrupted its REE exports. The result of the incident led to the impression that China used its monopoly in order to punish a competitor;
- At the same time, in the USA, the United Steelworkers (USW) files a formal petition against China, in order to stop or reduce competition in the green economy[13]. The petition consists in a 5.800 pages file. In the argument of the petition, USW denounced the Chinese restrictions regarding access to these critical materials; pursuant to USW petition, China undertook a range of measures which were not authorized by the World Trade Organization (WTO). Furthermore, the American Union added that the export restrictions lead to price increase outside China, and urge enterprises to relocate production in China, which would strip USA of the rare earths-based industries. The US Government considered the USW petition but no immediate formal complaint was filed to the WTO. By 2009, The USA, EU and
Mexico have filed a similar complaint against China because the latter had limited its exports to a dozen of minerals, from bauxite to zinc.
In return, China stated its right to use its own natural resource as deemed convenient and showed that it didn’t impose export quota for the parts manufactured in China[14]. Chinese sources stress the westerners’ interests for as low as possible REE oxides prices and add that, China is doing the opposite of what the USA has done – i.e. it is assuming the highly polluting mines.[15].
Other American and foreign bodies also stressed the dependency on the Chinese R. We are speaking about the US Departments of Defense and Energy, Japanese Government, the European institutions and the German industry. Yet, the United Steelworkers petition was the most combative in this controversy[16].
Actually, in the rare earth elements policy and economy, two great directions were developed:
- The industry of REE outside China became more dynamic. Molycorp, the strongest US company in the area, reopened the Mountain Pass mine, by means of the 275 million Euros received from the US Government. In Australia, Lynas enterprise reopened the Mount Weld mine.
- Today, at least 20 exploitation and production projects are ongoing. The financial institutions already begin « to see » the opportunity to make profit, investing in such projects. In the fall of 2010, for example, the value of the stock market index of the rare earth elements enterprises increased by 35%. At the same time, the large consumers are developing alternative techniques to reduce the dependency on the REE. The manufacturer Toyota is making these attempts by using a prototype for the engine without permanent magnets and Hitachi has already developed a technology to recover the rare elements from hard disks. At diplomatic level, the Chinese president, Hu Jintao, while on a visit to the USA, reassured the Americans that « the practical cooperation » will continue to develop to benefit of both sides[17].
- In Europe, the point adopted by the Bundesverband der Deutschen Industrie (BDI), which groups the German federations of employers is significant. Following the third BDI congress regarding the raw materials supply security, (Rohstoffsicherheit), from October 2010, its President Hans-Peter Keitel stated: « We are not at war with anybody, but China is causing the most issues and its measures are against the WTO regulations. Particularly, we are purchasing 97% of China’s rare earth elements». The solution proposed by Hans-Peter Keitel was to grant free access to these natural resources.[18]
The free access that the German industry claims for itself is not granted through reciprocity to the Chinese enterprises in Eastern Europe and Central Asia that have become the new German «hinterland» (area of influence)[19].
The Head of the German federation of employers BDI stressed the fact that Germany’s industry is based on a supply strategy established in 2008 by the European Commission and known as the “Raw Materials Initiative”; the work documents of this strategy identify 14 critical minerals obtained from rare earth elements. On February 2nd 2011, this strategy and an adherent action plan were made public by the European Commission with the purpose of supplying the EU industry with critical minerals.[20] The Commission does not exclude the appeal to commercial reprisals, if necessary.
Bibliografie
[1] cf. D’Arcy Doran, La Chine réduit son offre de terres rares pour protéger ses intérêts, AFP sur Google News, le 24 octobre 2010
[2] lower due to cheap Chinese labour
[3] ***, Pékin joue de l’arme des terres rares, în Le Figaro, 25 octobre 2010
[4] pe site-ul www.GreatWesternMineralsGroup.html, vizitat pe 19 iulie 2012, orele 5,52
[5] ***, La Chine reduit ses exportations de terres rares pour debout 2011, în Le Monde, 29th of September 2009
[6] Grégoire Macqueron, Des terres rares en abondance pour les technologies vertes?, on we bsite www.Futura-Science.com, visited on 19th of July 2012, 8 :15
[7] “It was the country’s tolerance for quick and dirty extraction that made it the global leader”. Rare earth even rarer, Beijing Review, 21 janvier 2011
[8] Hurst, Cindy, China’s Rare Earth Elements Industry: What Can the West Learn?, Institute for the Analysis of Global Security, Washington, mars 2010
[9] Antimony is used, among others, fro clothes fireproofing, increasing heir fire resistance. China produces approx. 90% of the world production; after***, Antimony on a high as Beijing goes green, Financial Times, 15 septembre 2010
[10] ***, China’s rare earth campaign targets environmental protection, Xinhua Insight, 16 septembre 2010
[11] Xu Guangxian et al., An Emergency Call for the Protection of Thorium and Rare Earth Resources at Baiyun Erbo and the Prevention of Radioactive Contamination of the Yellow River and Baotou, quoted by Cindy Hurst
[12] cf. Beijing Review, 21 janvier 2011
[13] ***, USW Files Trade Case to Preserve Clean, Green Manufacturing Jobs in America, United Steelworkers, communiqué de presse, 9 septembre 2010. site Internet de l’envoyé commercial du gouvernement américain où l’on trouvera un résumé. Voir: http://www.ustr.gov/about-us/press-…
[14] ***, China does not have monopoly on rare earth, Caijing Guojia Zhoukan, 31 octobre 2010
[15] ***, China defends its policy on rare earth export control, Communiquee gov., 29 août 2010
[16] Such point of view was considered more chauvinistic than the one of the USA Chamber of Commerce. The following phare is a relevant example: “The USW believes that the nation that leads the clean energy economy will lead the global economy”. Apud United Steelworkers’ Section 301 Petition Demonstrates China’s Green Technology Practices Violate WTO Rules, USW communiqué, 9 septembre 2010
[17] ***, China leader answer questions on currency, relations with US, Wall Street Journal, 17 janvier 2011
[18] Hans-Peter Keitel, Rede. Rohstoffsicherheit für Deutschland und Europa, 26 octobre 2010
[19] A possible model for such a strategy would be the natural gas pipes business which the Federal Republic agreed with the former Soviet Union in the seventies, Dans: Position Paper. Chinese Activities in Eastern Europe. Success through market-aggressive financing offers, Ost-Ausschuss des Deutschen Wirtschaft, BDI, octobre 2010
[20] Rede von Bundeskanzlerin Dr. Angela Merkel auf der Jahresmitgliederversammlung des Ost-Ausschusses des Dertschen Wirtschaft, Berlijn, 14 oktober 2010
Source: Dobrescu, Emilian M. (2023). The Rare Earths Economy, MultiMedia Publishing, ISBN: 978-606-033-785-0, DOI: 10.58679/TW70453, https://www.telework.ro/en/e-books/the-rare-earths-economy/
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