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The status quo of cheap rare earth exports needs to be reversed

China has always been the world's most important rare earth supplier. Data show that China's rare earth supply accounts for about 80% of the world's rare earth supply. In 2017, China's rare earth ore production was 105000 tons, accounting for 81% of the global rare earth supply. Among the proven rare earth reserves, in addition to China ranking first in the world (37%), Brazil, Vietnam, Russia, India, Australia, the United States and other countries are also relatively rich in rare earth reserves. However, the global supply of rare earths has long been dependent on China. According to the predicted growth of rare earth demand and the current mining speed and scale, China's rare earth resources will be exhausted in the next 25-30 years and become rare earth


China has always been the world's most important rare earth supplier. Data show that China's rare earth supply accounts for about 80% of the world's rare earth supply. In 2017, China's rare earth ore production was 105000 tons, accounting for 81% of the global rare earth supply.

Among the proven rare earth reserves, in addition to China ranking first in the world (37%), Brazil, Vietnam, Russia, India, Australia, the United States and other countries are also relatively rich in rare earth reserves. However, the global supply of rare earths has long been dependent on China. According to the predicted growth of rare earth demand and the current mining speed and scale, China's rare earth resources will be exhausted in the next 25-30 years, and the time to become a rare earth importer may be earlier.

Why do other countries that have reserves of rare earth resources basically do not mine rare earth? Is China unique in rare earth mining technology? Obviously not. Generally speaking, rare earth mining and refining do not require high technology. In fact, many rare earths in China are mined by township enterprises. The international competitiveness of China's rare earths largely comes from lower resource costs and environmental costs, but China's rare earth companies have been losing money. In addition to smuggling exports, China's rare earth exports rose rapidly from 16000 tons in 2012 to 47000 tons in 2016, while exports fell from $90 million in 2012 to $35 million in 2016. This status quo cannot be sustained.

Rare earth is a non-renewable strategic resource. Scholars at home and abroad have found that the development of low-carbon energy technology will rely heavily on key metals, and some key materials will face the constraints of supply shortage in the future. Medium-term capacity shortage and long-term resource shortage may exist. It can be predicted that China's new energy development will promote the sustained and substantial growth of rare earth metal demand. Since the government regards rare earth as a strategic resource, rare earth mining must have strategic thinking.

The media often say that China wants to compete for the right to speak ". According to the huge market share of China's rare earths, it should be an industry that can really have a "voice", but this is not the case. OPEC's oil exports account for about 60% of the world's oil trade volume, and its 14 members, representing different national interests, can jointly limit production to maintain oil prices, why can't Chinese rare earth companies maintain prices? With the development of new energy technologies, global demand for rare earths will increase substantially, and China itself is a big consumer of rare earths, if the current situation of exporting rare earths at low prices and in large quantities is not changed, China's demand for rare earths will inevitably be constrained.

From mining to smelting, every link of rare earth will cause pollution to the environment, including the destruction of vegetation, soil erosion, ecosystem imbalance, etc., and may also precipitate wastewater ammonia nitrogen, pollute water sources, and pollute the air with various gases, and even some effects It is difficult to recover. Therefore, compared with the current international rare earth prices, the high resource and environmental costs are the main reason why Brazil, Russia, Australia, the United States and other countries have not exploited their own rare earths.

The black rare earth industry chain is still the biggest problem for the sustainable development of China's rare earth industry. The huge economic benefits of black rare earths make the illegal mining of black rare earths repeated. Illegal mining, over-target mining and illegal smelting and separation form the black rare earth industry chain, while low-cost black rare earth provides a source for rare earth smuggling and export. If there is no real policy design to extinguish the illegal black rare earth supply chain as soon as possible, it will be difficult to reverse the current situation of China's cheap and large exports of rare earths. Therefore, the government needs to increase policy efforts to internalize the resource and environmental costs of rare earth mining as much as possible.

First of all, strict regulation of black rare earth is the primary task to reduce environmental damage. The competitiveness of the black rare earth industry chain comes from basically no resources and environmental costs. The relevant government departments have recently stepped up efforts to crack down on black to reorganize the order of the industry and taken various measures to crack down on illegal rare earth black interest chains, including reward reporting, rare earth special invoices, strengthening project audit, mine fence construction, judicial crackdown on illegal mining and processing, etc. Judging from the current market supply and demand, the effect of the crackdown is not obvious, so it is necessary to take more stringent monitoring and more severe punishment measures. In addition, the government can also reduce the export of black rare earths through storage.

Second, the environmental hazards of rare earths need to be further reduced. Rare earth mining has caused many environmental bad debts and faces the problem of who will pay for environmental restoration. The government needs to establish an ecological restoration mechanism on the basis of the principle of "who invests, who benefits", and do a good job in the restoration of abandoned rare earth mines. The increase in the concentration of the rare earth industry will be more conducive to the protection of resources and the environment. On the one hand, it will be easier for the government to supervise large enterprises; on the other hand, large enterprises will have the strength to adopt advanced production processes and invest more resources. In environmental protection, it is also more capable of integrating upstream and downstream resources and enhancing the value of the industrial chain.

Finally, the protection of resources and environment needs to further improve the concentration of rare earth industry. Although the concentration of China's rare earth industry has been greatly improved, and the pattern of the rare earth industry dominated by the six major groups has basically taken shape, it is expected that the national rare earth integration will not be completed until 2020. Taking praseodymium neodymium oxide as an example, according to statistics, the current six major groups together account for less than 50% of the total market. Since China is facing a global market, higher industry concentration is beneficial to enhance global competitiveness. In addition, because it involves national strategic resources, a national planning layout is needed to break the barriers of local interests and the existing interest pattern, and take advantage of the current opportunity of loose production capacity and low prices to further integrate China's rare earth industry. The government can also promote the further increase of enterprise concentration by raising the threshold and cost of resources and environment, as well as fiscal and financing support.

Source: magnet manufacturer Youlian Magnetics www.youliancy.com

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