Qualified RE Export Companies To Be Shrink Down to 20 Next Year

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The number of enterprises with export certifications of rare-earth (RE) has dropped to 32 currently from 47 in 2006, and it has a chance of further shrinking down next year.

“Probably under 20 with all pure RE trading companies being screened out leaving only entity enterprises.” A reliable source revealed on November 5.

Earlier news said that Ministry of Commerce (MOC) was adjusting the export policies on rare metals. And the export quotas saw a declining trend with extent of 2% to 3%. And the declining extent of export quotas for RE might be more.

Picture source: New York Time

The above reliable source claimed that RE export quotas will also concentrate on leading enterprises in the industry. China Minmetals, China Nonferrous Metal Mining and Baogang Rare Earth are all objects of government special assistance.

RE Disorder Urging to Reform

Regarding on the in-turn accusing on China’s RE policies by Europe, America and Japan recently, the former vice minister of MOC, Wei Jianguo pointed out in the Forum of Strategic Cooperation and Development between Europe and China held on October 30, that currently China is facing a more and more severe problem on resources and environment, thus is necessary to enhance the management of manufacture, consumption and export of mining products including RE.

“Many companies would rather save troubles and purchase profit at any cost without any consideration of environment pollution, which bring huge pressure on environment in a long term.” Chen Zhanheng, Dean of Academic Department of China RE Association told journalist.

It is said that all the processes in RE manufacturing and mineral dressing will generate waste water. The exploiting of RE has been in disordered state in 1980s to 1990s. But now the mining methods have been improved greatly applying the advanced in-situ leaching that has smaller harm to vegetation than before. But once the chemicals infiltrate in underground water or farmland, the consequences would be unpredictable.

Regarding the pollution from RE manufacturing, Li Junfeng from Energy Research Institute of National Development and Reform Commission expressed that the reason for China’s exported RE to account for a comparatively high proportion is its serious pollution and high cost, which some countries not willing to pay.

As journalist learned, some European and American countries also have RE mines but were being gradually forbidden to exploit in recent years, and they turn to China to import our cheep RE instead. Yet China is bearing the high environmental cost. Separation is the most polluted process in the producing line, and most of the over 90 separation factories in China are beyond the emission limit.

China is now realizing these existing problems gradually. Since 2006, MOC has strengthened the management and control of RE export and the export quotas is declining year by year. This year it fell by almost 40%. On the other hand, the demand for RE shows a powerful growth. The declining supply and growing demand caused a soaring price.

The soaring price also stimulate the smuggling of RE. As incomplete statistics shows, at least 20 thousand tons of RE are smuggled every year in China, while the export volume from official figures is less than 40 thousand tons, which means the smuggled RE account for half of the exported one.

An insider from RE trading business told journalist, presently, the price of export license has surpassed the price of mineral products. Export price of some RE element has risen by 200 thousand to 300 thousand yuan per ton, which is 10 times higher than domestic market. Yet some companies would rather sell quotas, “selling quotas is more profitable than selling RE itself.”

An official from Ministry of Industry and Information Technology (MIIT) expressed, in a long run, our country possesses the richest RE resource in the world. However, because of the indiscriminate mining, excessive and over speed establishment of new projects and imperfect export management, our RE resource has been losing seriously, which “has already been jeopardizing the security of RE industry”.

Qualified Enterprises To Be Cut

Our journalist learned from MIIT that they are planning to promote a series of policies with expectation of solving the structural problems existing in RE industry step by step, through establishing a management system.

“The first thing to do to stop smuggling is to regulate the market, then supervision department should fulfill their duty, but the most important thing is that enterprises of RE industry should be self-disciplined. And the best solution is to gather the export quotas to a few leading companies, for large companies are usually more standardized, and more effective and well-targeted for supervision and management.” The above reliable source claimed.

In fact, the number of enterprises with export license is declining as well from 47 in 2006 to present 32, among which 3 are pure RE trading companies, who would be screened out as predicted, leaving only entity enterprises. It is estimate to be shrunk down to less than 20.

It is disclosed that the applying requirements for export quotas are to be heightened too next year. According to the requirements of 2010, the applying companies should have their export volume of over 2000 tons or export amount of 70 million RMB in 2008, meanwhile, the average export volume of last 3 years should be above 1500 tons or average export amount of above 15 million USD.

On the other hand, export quotas for RE has dropped by almost 40% this year, on which bases, it will be further shrink down next year.

Regarding this, the above reliable source analyzed that the export quotas will definitely be gathered to leading enterprises with China Minmetals, China Nonferrous Metal Mining and Baogang Rare Earth being major objects of government special assistance.

This trend has been reflected as early as last year when MIIT drew up the “Revision of Developing Plan for RE Industry in 2009-2015”. The document said, our RE industry has many problems as extensive operation, weak realization of environment protection and too many RE smelting and separation companies, therefore should enhance the industry concentration and provide support to large-scale companies to improve the industry level.

“RE separation companies will also be decreased from 100 to 20 in next 5 years”, an expert involving in the drafting part of the policy introduced. Some people even suggest to decrease export certificated companies to 10 and drop further 30% of export quotas. However, the decision makers are afraid that such dramatic cutting would severely impact the business of export companies, so they choose a solution in middle.

“But, it is not impossible for export certifications to be further shrunk down in 5 or 6 years. The key point is that how far this resource integration will go.”

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