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March 25th, 2013

China defends rare earth stance; smuggling exceeding legal exports

Published on March 25th, 2013 | Edited by: Eileen De Guire

Satellite photo of China’s Bayan Obo Mining District. Credit: NASA; Wikipedia.

A few days ago—at the European Raw Materials Conference—China’s Zhang Lirong reiterated his nation’s position that despite WTO actions, restrictions, which his country has been placing on rare earth-related exports, are largely the result of concerns about the environmental effects of mining and refining these materials. According to a report from EurActiv.com, Zhang, China’s deputy ambassador to the European Union, asserted that the conflict over rare earths pits the European Union and the United States against “environmental standards we have adopted. …The measures we have taken are a part of the growing awareness of the need for environmental protection and sustainable production.”

As part of its reporting on this story, EurActiv.com noted

Chinese officials have argued that better controls over mining and production of minerals and metals was essential to address worsening environmental and health conditions that have fueled public anger. Recently, Beijing announced it would take steps to tackle urban air pollution that has choked the capital and other cities this winter.

Zhang apparently made his comments as a reflection upon a WTO ruling jointly brought by the EU and the US against China for creating blocks to supplying the two groups with needed strategic materials, such as bauxite, coke, magnesium, manganese, and zinc. While the complaint and the subsequent ruling didn’t explicitly address rare earths, the WTO action was seen as a proxy for a full battle over access to Chinese elements and ores.

While the Great Recession temporarily has turned down the heated dialogue about Chinese rare earths exports (and demand for exports actually was well below the nation’s export ceiling for 2012), it is worth noting that Zhang pledged at the meeting, “China will continue to supply the world market.”

But Zhang, I think correctly, also said China, “calls on other suppliers of raw materials to share their materials.” I take that to mean that, in the long run, countries with domestic rare earth deposits—but not the gumption to deal with the mess that comes with processing the ores—ought to rethink their position.

It’s not exactly parallel, but I have to admit that I have some sympathy and see some similarities between China’s position and the situation faced in my home state, Ohio, that is constantly being told that it legally cannot block companies in other states that want to dump their trash, fracking fluids, and other environmentally risky wastes here.

Further, I have seen nothing that disputes China’s assertions, viz., that the negative effects of rare earth mining are far from being contained. On the contrary, the situation may be growing worse because China’s regulatory structure, so far, is apparently losing the battle to stop bootleg mines and rare earth smuggling.

For example, a 2012 China Daily news report, headlined “Smuggling blights rare earths industry,” revealed that significantly more rare earth products are being smuggled than the amount being legally traded:

The smuggling of mineral resources out of China, especially rare earths, continues to increase, a senior official from the General Administration of Customs said. The minerals are mainly smuggled to neighboring countries such as Japan and the Republic of Korea, Chen Jianxin, deputy director of the administration’s anti-smuggling bureau, recently told China Daily. Chen says the huge demand from foreign markets and China’s high customs duties for rare earths are the main reasons behind the rise in smuggling. He declined to disclose the latest statistics on the smuggling, but China’s first white paper on the rare earths industry, released by the State Council in June, paints a grim picture.

The report said that in 2011, the amount of rare earths smuggled out of China was 20 percent higher than the amount of products that legally left the country. According to customs, China exported about 18,600 tons of rare earths products in 2011, accounting for 61 percent of the rare earths export quota of 30,184 metric tons released by the Ministry of Commerce for 2011. At the same time, more than 21,000 tons were smuggled out, according to the report.

Of the estimated 21,000 tons, only eight cases involving 769 tons of the minerals were detected as part of a campaign to crack down on rare earths smuggling, according to customs.

So, China has some real problems that cannot be overlooked by the rest of the world. One would hope that the US and Europe will stick with initiatives to develop domestic rare earth production capabilities, increase recycling and reuse, and spur research to find substitutes and alternatives, such as the new Critical Materials Hub and the  European Innovation Partnership on Raw Materials.


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