Bloomberg News

China Cuts Rare Earth Mining Rights by Half to Aid Consolidation

July 16, 2012

China, the supplier of 90 percent of the world’s rare earths, cut mining rights for the materials by about half to 65 nationwide to help the industry consolidate and create bigger producers.

Rare-earth mining rights in Ganzhou of Jiangxi province were reduced to 44 from 88, Chen Zhanheng, a deputy secretary- general at the Association of China Rare Earth Industry, said today in an interview. The western province of Sichuan had its rights lowered to seven from 18, while the Inner Mongolia-based Baotou Iron & Steel Group Co. absorbed its local rivals, the Ministry of Land and Resources said on its website, without giving details.

The U.S., the European Union and Japan complained in March to the World Trade Organization about China’s limits on exports of rare earths, a group of 17 chemically similar elements used in wind turbines and hybrid cars, with the U.S. saying the curbs create harmful disruptions and distortions in global supply chains. China’s export quotas, in place since 1999, and its efforts to boost consolidation are aimed at conserving resources and protecting the environment, the government has said.

“Reducing mining rights helps streamline rare-earth development,” Chen said, “Still, illegal mining is a bigger issue that the government needs to tackle,” he said, without elaborating.

China recently arrested 19 suspects for alleged illegal mining in Xinfeng in Guangdong province and punished 11 officials for lack of supervision, the ministry said today. Some of the output from illegal mines was smuggled to neighboring countries for processing after China tightened its regulation of domestic smelters, Chen said.

Average prices of rare earths have fallen more than half from 2011’s record levels as consumers reduced purchases or sought alternative materials.

Neodymium oxide, which is used in mini hard drives in laptops and headphones in iPods, traded at $110 as of July 16, according to Lynas Corp., an Australian rare-earth developer. The price surged to $234.40 a kilogram in 2011 from $19.12 in 2009, the company said.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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