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Rare Earth Elements in China

Intelligence Info - Descarcă PDFDobrescu, Emilian M. (2023), Rare Earth Elements in China, Intelligence Info, 3:1, 48-58, https://www.intelligenceinfo.org/rare-earth-elements-in-china/

 

Abstract

After the volume of deposits, the main concentrates of minerals containing rare earth elements are found in China. Rare earth elements industry began to be developed in China in 1950. The Chinese production gradually started in 1985. Exporting at very low prices, the Chinese eliminate any Western competition: their monopoly installed bit by bit. China is in the middle of a delicate transition, with a new generation of leaders, approaching to power, something that happens only once at 10 years.

Keywords: rare earth elements, industry, China, competition, Inner Mongolia

Elementele pământurilor rare în China

Rezumat

După volumul zăcămintelor, în China se găsesc principalele concentrate de minerale care conțin elemente de pământuri rare. Industria elementelor de pământ rare a început să se dezvolte în China în 1950. Producția chineză a început treptat în 1985. Exportând la prețuri foarte mici, chinezii elimină orice concurență occidentală: monopolul lor instalat puțin câte puțin. China se află în mijlocul unei tranziții delicate, cu o nouă generație de lideri, care se apropie de putere, lucru care se întâmplă o singură dată la 10 ani.

Cuvinte cheie: pământuri rare, industrie, China, competiție, Mongolia Interioară

 

INTELLIGENCE INFO, Volumul 3, Numărul 1, Martie 2024, pp. 48-58
ISSN 2821 – 8159, ISSN – L 2821 – 8159
URL: https://www.intelligenceinfo.org/rare-earth-elements-in-china/
© 2024 Nicolae Sfetcu. Responsabilitatea conținutului, interpretărilor și opiniilor exprimate revine exclusiv autorilor.

 

Rare Earth Elements in China

Dr. Emilian M. DOBRESCU[1]

dobrescu@acad.ro

[1] Academia Oamenilor de Știință din România

 

Introduction

After separation by technological processes, some quite complicated oxides of the 17 minerals are primarily used to obtain high-tech products, as well as some green technologies.

After the volume of deposits, the main concentrates of minerals containing Rare Earth Elements (REE) are found in China (in Inner Mongolia province) in the U.S.A, Australia, India, the former USSR. Some sources estimate that 47 percent of the REE world reserves are found in China. The remaining 53 percent of these reserves are found almost everywhere: in 2002, the mine from Mountain Pass (California, U.S.A.) has closed its doors; equally the strongest mine in Australia. Then, in 2012, both mines were reopened; there are still active mines in Central Asia and South Africa. Geological studies have identified REE deposits on the island of Greenland and even on the European shelf. The problem is that putting in place an exploitation takes a long time. It takes 5 to 10 years to do research and gather the necessary permits.

Researchers are working to find alternative solutions to enable companies to obtain products of the same level; it was advanced in this sense towards recycling products containing REE, to reuse these REE. And if the price of rare metal separation from deposits will increase, it will be more profitable for them to be recycled.

China

REE industry began to be developed in China in 1950. The Chinese production gradually started in 1985. Exporting at very low prices, the Chinese eliminate any Western competition: their monopoly installed bit by bit.

In the motto of our work there are the prophetic words uttered in 1992, by Deng Xiaoping, the leader of China at the time. His comment was the basis of an extensive program of development and exploitation of REE vast reserves of China, reserves estimated in 2012 to 57 percent of the global total. After seven years of Deng’s remark, his successor, Jiang Zemin urged China to move forward: “Improve the development and use of rare elements,” he urged, ”and change the advantage offered by resources into economic superiority.” Then, Beijing has invested millions of dollars in the basic researches and applied in the REE field and carried out researches in two state laboratories, where hundreds of scientists’ work, dedicated exclusively to this field. The only two magazines in the world for rare elements are in Chinese.

In 2012, after 60 years of development and construction in the REE field, although the use of these resources is not in compliance with environmental standards, China is the largest country possessing REE deposits, the largest producer, consumer and exporter. Bayan Obo mines (Inner Mongolia, an autonomous province of China), located on the border with Mongolia, has the largest REE deposits in the world, but combined with iron deposits. Bayan Obo represents for REE what it meant Saudi Arabia for oil. Bayan Obo deposits contained two-thirds of the total REE known on the planet in mid-2010.

Bayan Obo mines have tripled in the last 10 years the REE production to reach 125,000 tons in 2010. Local peasants, land holders containing REE deposits sold to the Chinese government the land in question at very high prices. The two major mines in China that extract REE are controlled by the mining giant Baotou Steel Rare Earth, a company with public capital. Operating costs are low because Chinese labour is very cheap: the miners do not earn more than 150 euros per month. The techniques used in separation processes are controversial, since the toxic chemicals are used for minerals refining processes.[1]

Baotou is a city with rank of municipality, capital of prefecture, situated on the northern bank of the Yellow River, located at 160 km to the west of Hohhot, the capital of Inner Mongolia[2]. Baotou is the largest city located on the north side of the country. The region was colonized by Chinese and served as a garrison during the Tang Dynasty (618-907), then being occupied by the Mongol tribes. In 1730 it was still a hamlet, which was consolidated as a frontier town during the Qing Dynasty (1644-1912). Baotou then gradually developed as a city of the market economy. In 1923 it was linked through railway of Beijing and since 1925 it has the status of administrative capital of county. Throughout the twentieth century it grew rapidly, becoming an important commercial centre for trade in Mongolia and north-western China, controlling also the marketing area, including most part of what is now Ningxia Autonomous Region, as well as Gansu and Qinghai provinces. The area from the north of Huang El was colonized by the Chinese in the late nineteenth century and Baotou has become the main trading centre for the Chinese community. The city grew rapidly, and during the Japanese occupation (1937-1945) it was a centre of the autonomous government of Mengjiang. The Japanese began to develop light industry in the city and, also there were discovered nearby rich deposits of coal and other minerals.

After the establishment of popular power in 1949, Baotou has been completely transformed. Its rail link with Beijing, which was destroyed during the civil war in China, was restored in 1953, and the railway was doubled in the late 1950s. Another railway was built to the southwest of El Huang, to the city Lanzhou in Gansu, allowing rail link with central and southern China, or the city Urumqi, the capital of the Uighur autonomous republic from the northwest of the country.

Baotou becomes an important centre for steel manufacturing, based on the iron ore discovered on north, in Bayan Obo, a town to which it was linked on the railway; to all these contributed the coking coal found in Shiguai in east, near Daqing Mountains, and then REE deposits found also in the area. Steel complex in Baotou began work in 1961, becoming fully operational only in the late ’60s.

The subsequent economic growth of Baotou was phenomenal, the municipal area is expanded to include coal mines in the east and iron and complex ore in the west. The city has emerged as a major industrial base not only for Inner Mongolia and northern China, but for the whole country. Industrial development continued. Another railway line, completed in 1989, connects Baotou with the north of the country and the province Dongsheng, rich in coal. Since 1992, high technology has been introduced widely in the industrial park of the city; here there are produced machinery, chemicals and electronic equipment. Baotou is linked by Hohhot through a motorway. About 2 million Chinese live today in Baotou.

A subsidiary of Baotou Steel Corporation, Baotou Steel Rare Earth, specialized in REE processing is now developing in Baotou; there have already been approved investments of 3 million dollars. Local Government cherishes the hope to build in Baotou a world-class industrial base in the REE field and to establish a mechanism to stabilize prices in this field. The REE reserve in Bayan Obo, near Baotou, contains about 75 percent of the total REE from China. This great Asian country, of the planet, produces 97 percent of the world’s REE.

China is the only country that produces almost all rare ores and has already announced its refusal to export them. Understanding the geostrategic importance of its REE deposits, China decided in early 2010 to use them only for the production obtained in its domestic market. The press news remained discreet on broadcast media, in failing attention. In an attempt to control the concern for its REE, China has authorized foreign factories to produce on its territory and participate in the operation of these mines. Probably between 2011 and 2012, Chinese domestic demand for REE will exceed the capacity of production. “This situation obliges China to ban the export and sale of REE abroad,” said Jack Lifton, specialist in the field. Perhaps after 2012 China will become the first manufacturer of solar panels and wind turbines in the world, two intensive industries of REE.

China now controls a major part of global production of rare metals: 95 per cent of the total volume of production of oxides from REE, 87 percent of the production of antimony and 84 percent of the production of tungsten. Europe and U.S. are concerned about the limited access that they have at the vital minerals for the advanced technologies[3]. A European Commission report expresses concern about a possible shortage of the 15 lanthanides, rated “critical metals” for industry. China has become itself a major consumer of rare and critical metals.

Given the strategic importance of the area, workers at the Air Traffic Management Bureau of Hohhot observed on September 11, 2010, at around 20 p.m. (local time), an unidentified flying object (UFO)[4], at 40 kilometers east of Baotou, in Inner Mongolia Autonomous Region. Landing three aircraft belonging to some flights from Beijing and Shanghai to Baotou were delayed, and the aircraft were forced to fly in circles while waiting to land; Air China flight 1107, from Beijing to Baotou landed on the Erdos Airport and Juneyao Airlines flight 1137 from Shanghai to Baotou landed on the Taiyuan Airport. Only after two hours, Baotou airport received a notice concerning the resumption of normal operations.

In August 2010, companies Baotou Steel Rare Earth High-Tech Co and Jiangxi Copper Corp have proposed to launch a unified pricing mechanism at national level on light REE – measure, which had to allow China to play a more important role in international markets of this very precious mining resource.

China supplies more plus than 95% of REE oxides in the world and has more than half of the world reserves. Baotou Steel Rare Earth provides alone 46% from the supply of REE in the world market. Approximately 100 small Chinese factories produce REE in Baotou throwing waste in the Yellow River. We are facing a paradox of the current technique, between the use of REE for the reusable energies field and cleaner production processes.

Here’s what experts say: “China’s goal is to create new jobs and produce goods based on REE”, estimates Jack Lifton, independent analyst specialized on this topic in the United States, who continues: “We have to start to produce these rare metals in the United States, as we did another time. If not, China will be the only country to produce products having in composition REE in 2015.”[5] “The Chinese government hopes that the restrictions imposed will lead to the transfer in China of some technologies related to REE,” said Ren Xianfang, economist at Beijing of IHS Global Insight.

Alarm signals crossed the red in 2010 when analysts were faced with authorities’ attention on these raw materials. The Chinese government was even considering the ban to export REE as well as closure of mines. If such rules were adopted, foreign enterprises would be deprived of these metals widely used today in high technologies, including for military rockets production. “It’s a crucial time,” said also the Australian Dudley Kingsnorth, consultant in this field, who also added “In future years, import quotas for REE will be reduced and increasingly fewer countries will depend on resources in China; on the other hand, increasingly more companies have to relocate to China to ensure their supplying.”

At the end of September 2010, paradoxically, China announced its preparedness to resume its exports of rare metals to Japan[6], after the embargo imposed in the diplomatic crisis occurred between the two countries. Katsuyuki Matsuo, the chairman of Nippon Company Kan

Material specialized in rare metals trade, confirmed that Chinese customs resumed after only a week of disruption, on September 28, 2010, registration procedures of exports of these precious materials for the Nippon archipelago. Another Japanese importer, speaking on condition of anonymity, explained that the situation is different “from one port to another, because there was no official embargo. We are more confronted with administrative harassing.” Nippon State Secretary for economic and fiscal policy, Banri Kaieda, confirms that Beijing has blocked its sales of REE to archipelago, stressing that “it is important to cea.se a.s soon as possible this totally abnormal action.” He also stressed the need for Japan to develop its “alternative” supplying ways to face this kind of problems in the future.

In recent years, China has achieved a quota to export of REE, amounts which reduced them year by year, banning the export of REE in 2012. As stated above, the annual production of REE is about 125,000 tons per year, of which 97 per cent belong to China. This monopolistic control of production is largely tied by the deposit Baiyan Obo, located near the city Baotou in the north of China, in the so- called region of Inner Mongolia.

The ban of REE Chinese exports has several explanations: official target communicated is the intention of the Chinese authorities to bring together manufacturers to control better the quantities of waste they produce, which will lead to closure of small producers mines, the most polluting, so in a short period of time to reduce production and increase demand for REE in the world market. The industrialized countries have already been “invited” to relocate in China their manufactured production based on REE.

Chinese premier Wen Jiabao highlighted in a forum with American business men, that “an iPod is sold with 299 dollars USA and in the manufacturing chain, China receives only 6 dollars USA for it. Since 2008, China consumes more than half of its total production of rare elements and on the black market of these chemicals a big part of them is transacted.

China understood the strategic interest for these metals since the 80s of the last century. In that era, the countries relied on free exchange to ensure access easier to resources. Without taking too much into account the environmental constraints, China – the holder of the largest REE world reserves – has increased since then, year by year the production, which allowed it to replace USA on the first place in the top of the world producers.

Then, after 2005, with other economic interests, China has limited permanently its REE exports[7]: between 2005-2011, they decreased from 60,000 tons to 30,000 tons of REE exported by year when global demand passed from 46000 to 50000 tons per year. The price of these critical minerals increased in this period of time even 1,000 times, even if they were or are used in a small amount in the finished products, which until 2012 had no visible repercussions manifested by higher prices of respective products to the consumers. Rising prices of REE only affected intermediate production.

According to an initial complaint lodged to WTO in late 2009, by the European Union, U.S.A. and Mexico, WTO specifically asked China to clarify its export quotas imposed for its REE[8]. It is known that since 2010, China provides a quasi-monopoly of REE production over the world. Moreover, China consumed more than 50 percent of its own production. Other REE consuming countries are Japan, U.S.A. and developed countries within the European Union (Germany, France, Italy, and U.K). In 2010-2011, after the drastic reduction in REE Chinese exports and even the ban of such exports in 2012, some of the above-mentioned countries have resumed their activity extraction despite the consequences of the environmental pollution and to counter reduced shares of production announced by China.

Chinese export quotas have been reduced drastically, practically halved to about 30,000 tons since 2011. Then, the Chinese government gave assurances that the level for 2012 will be the same with the one in 2011, later announcing the embargo on exports of this kind. In March 2011, U.S.A., European Union and Japan have filed a complaint more to WTO, due to limitations on export imposed by China for its REE; due to monopoly position of Chinese extractive industry of oxides of REE, China has been convicted in this file at the end of 2011.

After criticism of its trading partners for the restrictions imposed on export of these minerals essential for high-tech[9], the Chinese government announced in mid-May 2012, additional export quotas of REE; thus producing Chinese enterprises can export supplementary about 11,000 tons of REE in 2012, i.e. a total amount of 21,226 tons, according to a press release from the Ministry of Commerce of this country. The Chinese government also announced shortly before the embargo on REE exports…

Economic observers agree that in order to ensure its control of these strategic minerals, Pekin has developed a long-term industrial policy to limit its exports in order to “barge the big geopolitical game world.”[10] However, the overall strategy is based on the game of alliances between Chinese producers and the ones who process minerals based on REE in the West. Today, the issue of restriction on the use of REE worries defence industries in the developed countries of the planet. Growth of China’s military power reveals the strategic error that Westerners committed.

In the race to build hybrid cars and wind turbines, to feed growing demand for green technology, China has a clear advantage – has the world’s largest reserves of REE and thus dominates global production.[11] Wind turbines Xinjiang Goldwind Science & Technology brand are hybrid cars produced with funding of the American billionaire Warren Buffett.

China reduced its REE exports systematically since 2005, applying quotas and taxes, saying that limiting exports is based on its needs to supplement domestic production of goods based on REE and to develop clean energy sectors and high-tech. In 2010, export quotas on REE were reduced again by 40 percent. China’s trading partners have responded to the new export quotas reductions, noting that Chinese politicians want to control the REE world market. In order not to face risks in supplying, some foreign companies in the REE field have decided to move their production lines in China.

Lax environmental standards and cheap labour have allowed China to sell long time at export the REE production at low prices, of dumping (below market price). Lower prices with whom China sold REE undermined global production, which led to the closure of REE mines in many countries of the world. Baotou Steel Rare Earth Hi-Tech Co. increased its REE reserves with about 200,000 tons, which allowed it then to determine world prices.

American China Company BYD bought lithium deposits reserves in the Sichuan area, Chinese province known for its rich reserves of lithium and other materials. In parallel, a sister company developed by the Toyota automobile company has ensured a contract to supply lithium from Argentina while Toshiba Corp, another rival Japanese company created a joint venture with state-owned company Kazatomprom, from Kazakhstan. This allowed designers from Toyota to successfully launch the hybrid car Prius that works on gasoline and electricity stored in batteries, which is sold very well, to Nissan manufacturers – to launch the electric car Leaf, and to those from General Motors to design, in their turn, the hybrid model Chevy Volt. But only one accumulator (battery) from the endowment Prius uses 10-15 kg of lanthanum.

On June 6, 2012, BBC Mundo said under the title “China’s economy is deflating?”: “Some indicators are beginning to point to an economic downturn in the Asian country with a strong decrease in electricity demand and industrial production, as well as factories efficiency and retail sales. China suffers for months because of the “cold wind” blowing from Europe – its higher export market, even higher than that of the United States. The country’s manufacturing sector has contracted for six months, mainly because of the weak export demand, according to a recent study … Many enterprises have financed the import of raw materials such as copper, iron and aluminum for the construction industry. Supplies of unused copper that accumulates in warehouses of China have become so large that there is hardly space to keep the surplus. This may be only a temporary problem in short term, but it could be the beginning of the end of the housing boom, where there were built much more apartments than the country actually needs. There are ghost towns completely built. It seems that many of these empty floors were purchased by enterprises and Chinese families as an investment more attractive than depositing money in a low-interest bank account. Growth rate in China fell under the magic number of 10% when the West fell into the deepest recession where it is found from the World War II. For example, the Asian giant has built from scratch the largest high-speed rail network in the world, five times the volume of French high-speed network.

Conclusion

China is in the middle of a delicate transition, with a new generation of leaders, approaching to power, something that happens only once at 10 years. There is a political battle boiling, evidenced by the dismissal of the ostentatious governor of Chongqing, Bo Xilai. Many party members have benefited from the housing boom and credit in the past three years. If this peak is over, they will not want to be part of the inevitable losers. How this battle will take place, especially if China is facing protests of the unemployed workers out in the streets, is unknown to everyone.”

Here’s how Fidel Castro commented this news[12]: ”I am far from sharing this Yankee grim scenario about the destiny of China, and I wonder if it can be ignored that China has the largest REE reserves in the world (subl. ns.) and enormous volumes of shale gas that will enable it to exercise its power over global energy production when the power to lie and obey will cease to exist. It is already too much.”

Bibliography

[1] acc. Stéphane Pambrun, A Pékin, on ne badine pas avec ce nouvel Eldorado, on the website www.novethic.com, visited on May 4, 2010

[2] after Encyclopaedia Britannica Online, website visited on September 19, 2010

[3] Simona Haiduc, China controlează azi cea mai mare parte din producţia globală de metale rare, in Financial, June 22, 2010, p.10

[4] quote from People’s Daily Online, 2010 September 13

[5] Allison Jackson, Les “terres rares” Trésor convoité de la Chine, on the website www. aujourdhuilachine.com/actualites-chine-les-terres-rares-tresor-convoitede-la-chine-12900.asp?1=1, visited on December 1, 2009, at 10.56 a.m.

[6] ***, La Chine reprend ses livraisons de terres rares vers Japon, in Le Monde, September 29, 2010

[7] Dominique Albertini, Les terres rares, un élément majeur de la puissance chinoise, in Liberation, March 14, 2010

[8] ***, Matieres premieres: defaite chinoise devant l’OMC, in La Tribune, 28 December 2009

[9] ***, La Chine autorise des quotas supplémentaires d’exportation de terres rares, in Liberation, May 17, 2012

[10] ***, Terres rares, un enjeu stratégique, in Le Monde Diplomatique, March 15, 2012

[11] Leonora Walet, Asia Green Investment Correspondent, Rare earths crucial in drive for green gadgets, correspondence Reuters from Hong Kong, August 12, 2010

[12] ***, Reflecţiile Comandantului Fidel, Embassy of Cuba in Romania, June 9, 2012

Follow Emilian M. Dobrescu:
Între 1990-2019 a fost secretar ştiinţific al Secţiei de ştiinţe economice, juridice şi sociologie a Academiei Române şi, respectiv, al Comisiei de istorie economică şi istoria gândirii economice a Academiei Române; între 1996-2019 a fost secretar științific al aeleași secții a Academiei Oamenilor de Știință din România; 2013-2019 – cercetător științific principal I la Institutul de Economie Națională al Academiei Romîne; din anul 2000 este profesor universitar, iar din 2010 - conducător de doctorat în domeniul economie la Departamentul de științe economice, drept și sociologie al Școlii Doctorale a Academiei Române.

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