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New rare earth access standard unveiled

China will strictly regulate rare earth industrial access in terms of production scale, technology equipment and resources utility, according to a new standard issued yesterday by the Ministry of Industry and Information Technology.

According to the standard, the production scale for mixed rare earth mining enterprises should be no less than 20,000 tons per year, while the bastnasite ore mines production should be no less than 5,000 tons a year. The scale of ion-type rare earth ore companies should be no less than 500 tons per year and the rare earth melting and extracting enterprises’ should be no less than 2,000 tons a year.

This is the first time that the government has set thresholds for rare earth producers in terms of production scale.

At present there are 23 rare earth mining companies and 99 smelting enterprises in China. However, with the issuance of the new standards, more than one-third of mining companies and almost half of all smelting and extracting enterprises will be shut down due to their inability to meet the new standard, according to Jia Yinsong, an official from the ministry.

Besides weeding out sub-standard companies, the merger and recombination of rare earth enterprises within the industry will continue.

Jia said that the raising of access thresholds for rare earth companies will not only prevent malicious competition, but also improve the production capacity and operating ability of China’s rare earth industry.

However, related environmental protection standards seem to be lowered.

For example, the draft to regulate rare earth released in 2010 said: “It is prohibited to exploit monazite ore and other rare earth ores which are radioactive and cause severe pollution.” But in the newly released standard, this clause reads: “It is prohibited to exploit monazite ore. To those rare earth ores with radioactive elements, the relevant radiation protection and prevention measures should be taken.”

The new draft also fails to mention the index of vegetation recovery rate and noise criteria mentioned in the original draft.

Bai Ming, an official from the Ministry of Commerce believes it is injudicious to apply one rule of measure overall, because it is hard to quantify environmental standards. Also, there are great differences in different local places. Bai advised that the process of policy implementation should be more rigorous and balanced.

Mei Yuxin, a researcher at the Ministry of Commerce, said: “As technology is still developing, it is improper to prohibit exploitation of particular minerals. In terms of vegetation recovery rate and noise criteria, there is a lack of scientific and feasible quantitative indicators.” Mei also commented that in general, environmental standards had been raised.

“China is the world’s largest rare earth producer and exporter, providing more than 90 percent of the global demand, so reducing the number of domestic rare earth companies is good for fixing prices,” said Lin Boqiang, director of the China Energy Economic Research Center at Xiamen University.

The issuance of new standard reflects China’s determination to promote the development of the country’s rare earth industry. The government is more likely to support three or four domestic rare earth enterprises so that they can control the international market price in the future, Lin added.

Du Shuaibing, an analyst with Baiinfo, feels that it remains to be seen whether the necessary policies will be effectively implemented. He said: “Financial considerations inevitably mean that the local government will not allow local small rare earth companies to be closed.”

Bai added that the central government should also take local interest into account, through increasing fiscal income via equity participation. In addition, following the integration of rare earth resources, the export price of rare earth will be relatively raised, which will also bring myriad benefits to the local government.

Facts and figures:

  • In May 2010: Ministry of Industry and Information Technology released the draft to regulate rare earth industrial access.
  • In May 2011: China’s State Council issued a national guideline that aims to promote sustainable and healthy development of the country’s rare earth industry.
  • In December 2011: The management rules to regulate rare earth industrial access, improve management over output plans, and beef up regulations concerning exports will be released in 2012, China’s top industry watchdog said.
  • In June 2012: China released White Paper: Situation and Policies of China’s Rare Earth Industry.
  • On August 6, 2012: Ministry of Industry and Information Technology released standards to regulate rare earth industrial access.

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