Situation and Policies of China's Rare Earth Industry

III. Effectively Protecting and Rationally Utilizing Rare Earth Resources

Rare earths, as a non-renewable natural resource, need to be effectively protected and rationally utilized. As part of its drive to ensure the sustainable use of resources, China has been practicing protective exploitation of its rare earth resources for many years.

According to China's Mineral Resources Law promulgated in the 1980s, the state adopts a policy of planned exploitation with regard to mining areas that are embraced in state plans and are of great value to the national economy and specified minerals for which protective exploitation is prescribed by the state. In 1991, China prescribed protective exploitation for ion-absorption rare earth resources, exercising planned, unified control in all related procedures, including mining, dressing, smelting, processing, selling and export. In 2006, China began to exercise total-amount control over the exploitation of rare earths. In 2007, the state incorporated the production of rare earths into management by mandatory planning. In 2008, the state issued the National Plan for Mineral Resources (2008-2015) to exercise planned regulation and control, restrictive exploitation, tightened access and comprehensive utilization for rare earths and some other specified mineral resources, of which protective exploitation is prescribed by the state. In 2009, the state took back the power for registering, examining and approving the prospecting and mining of specified minerals, of which protective exploitation is prescribed by the state. In 2011, China adjusted the tax rates on mining of rare earths. The adjusted new tax rate for light rare earths (including bastnaesite and monazite) is 60 yuan per tonne, and for middle and heavy rare earths (including xenotime and ion-absorption rare earths) is 30 yuan per tonne, much higher than the rates before the adjustment, which ranged from 0.4 yuan per tonne to 2 yuan per tonne. The state also established a strategic reserve system and kept the rare earth reserves in the form of resources and products, designated the first 11 rare earth mining areas to be embraced in state plans, and formulated a special plan for key rare earth mining areas. China has tightened control on mining rights and enforced a system of mining rights allocation plans. In principle, the state has put a moratorium on accepting new registration applications for rare earth prospecting and mining, and prohibits existing mines from expanding their production capacities. The state exercises strict control over the total rare earth mining and production volumes to reduce resources development intensity, slow the depletion of resources, and advance sustainable development.

In recent years, China has launched special campaigns to regulate rare earth mining and production, effectively protecting and rationally utilizing rare earth resources in various ways. The state has tightened control of the total volume of rare earth mining and mandatorily planned quotas for rare earth production by means of satellite photography, video monitoring, regular inspection, monthly report system, special invoice checking, and opening phone lines to receive reports concerning violations of related laws and regulations. In pursuance of related laws concerning rare earths, China has cracked down on illegal rare earth mining and mining that exceeded quotas prescribed by the state, as well as on production activities of rare earth smelting and separation enterprises that were unplanned or exceeded the state-set quotas. China also has strengthened joint supervision in key rare earth production areas, investigated and punished rare earth enterprises that conducted mining and production in violation of laws and regulations, polluted the environment, caused wastes in resources, or did not have the necessary conditions to ensure production safety, and called to account those enterprises and individuals responsible for these violations in accordance with the law. The state has re-examined permits for rare earth prospecting and mining, and publicized a list of legitimate mining enterprises. It has also accelerated the formation of a long-term mechanism for regulating the market order and supervision of rare earth mining and production, advancing the merger and reorganization of rare earth enterprises, and phasing out outdated processes and capacities to realize large-scale and intensive production. By way of special rectification campaigns, more than 600 cases of illegal prospecting and mining were investigated and rectified, more than 100 cases were placed on file for further action, and 13 mines and 76 smelting and separation enterprises were ordered to cease production for rectification. In this way, the trend of illegal mining and production has been reversed.

The Chinese government has stressed the comprehensive utilization of rare earth resources. Over the past few years, the state has reinforced research into the geological structure of ion-absorption rare earth mines, advanced the building of "green" mines and comprehensive utilization demonstration bases, developed environmental-friendly and efficient mining technologies to increase the recovery rates of rare earths by a large margin, extended support to the development of new flotation reagents and ore-dressing equipment to raise the dressing recovery rates of rare earths, and worked to recover lean ores and tailings. China promotes balanced utilization of rare earth elements, encourages research into the application of light rare earth elements, such as lanthanum and cerium, whose reserves are relatively abundant, and expedites the development of technology for reducing or providing substitutes for the use of scarce heavy rare earth elements, such as europium, terbium and dysprosium. The state also fosters the comprehensive recycling of paragenetic ores of scarce rare earths that are difficult to recover during the process of ore dressing and smelting, and encourages the recycling of rare earth associated ores, including niobium, tantalum, thorium, strontium, potassium and fluorite.

China gives great support to the development of the circular economy in this field, and works hard for the recovery and utilization of secondary rare earth resources. The state encourages the development of special processes, technologies and equipment for the collection, processing, separation and refining of rare earth wastes, supports the building of specialized bases for the recovery and utilization of secondary rare earth resources, including molten salts after pyrometallurgy, slag, waste permanent magnet materials and motors, waste NiMH batteries, waste fluorescent lamps, dead catalysts, used polishing powder, and other waste electronic components containing rare earth elements.

IV. Better Coordination of Rare Earth Utilization with Environmental Protection

In recent years, out of the need of environmental protection, China has been improving its control over high-energy consuming, highly polluting and resource-based products and related industries. In the rare earth industry in particular, the state has adopted a series of effective measures to better coordinate rare earth development and utilization with environmental protection. China will never develop the rare earth industry at the expense of its environment.

The state has strengthened control of the rare earth industry with regard to environmental protection and formulated relevant laws and regulations, which is essential to the better coordination of rare earth utilization with environmental protection. Since the 1980s, China has enacted about a dozen laws related to environmental protection, including the Environmental Protection Law and the Law on the Prevention and Control of Water Pollution, and established the systems of environmental impact assessment, control of the total pollutant discharge, and ordered treatment of pollution within a time limit. The state promulgated and put into effect the Regulations on Land Reclamation to ensure the full fulfillment of land reclamation obligations, demanding that mining, environmental protection and land reclamation should be conducted concurrently to timely restore the eco-environment that has been damaged by mining. Since the implementation of the 11th Five-Year Plan (2006-2010), the state has listed energy conservation and emission reduction as part of the objectives of national economic and social development, and mandated the targets of reducing the intensity of energy consumption, chemical oxygen demand (COD) and sulfur-dioxide emission. The 12th Five-Year Plan (2011-2015) has added reducing the intensity of carbon-dioxide emission and emission of ammonia nitrogen and nitrogen oxides to the list of mandatory targets. In 2011, to intensify environment protection efforts in the rare earth industry, the state enforced the Pollutant Discharge Standards for the Rare Earth Industry, which sets the limits of COD, and emission of such pollutants as ammonia nitrogen, phosphorus, fluorine, thorium, heavy metals, sulfur dioxide, chlorine gas, and particulates for rare earth enterprises. At present, China has been making studies in the establishment of an environmental risk assessment system for the rare earth industry.

Earnest enforcement of laws and regulations on environmental protection has been the key to maintaining a good environment while developing and utilizing rare earth resources. In recent years, the state has enforced the environmental impact assessment system to the letter. An analysis, prediction and assessment report of the environmental impact that may be caused by a rare earth construction, expansion or renovation project must be submitted in advance, along with countermeasures to prevent and mitigate the impact. No project shall be implemented before it passes the assessment. To intensify environmental protection efforts in the rare earth industry, the state also strictly observes the stipulation in the Environmental Protection Law that installations for the prevention and control of pollution at a construction project must be designed, built and commissioned together with the principal part of the project, and that a construction project should not be commissioned or used until such installations are examined and considered up-to-standard by environmental protection authorities in charge. China exercises a pollution discharge license system and implements the Discharge Standards of Pollutants for the Rare Earth Industry. Rare earth enterprises are forbidden to discharge pollutants before they obtain pollution discharge licenses from the environmental protection authorities, and should strictly observe the standards on the density, quantity and channels of pollutant discharge. The state adopts a system of compulsory elimination of obsolete processes and equipment, and prohibits the use of tank and heap leaching methods for ion-absorption rare earths and the mining of monazite deposits only. The government also bans the use of technologies that cause heavy pollution and severe damage to the environment, and acts to prevent ecological degradation and environmental pollution at the source. In recent years, China has been stricter in implementing the deposit system for protecting and restoring the geological environment of rare earth mines, urging rare earth enterprises to carry out their economic responsibilities for environmental protection and restoration, and gradually establishing a responsibility mechanism of environmental control and ecological restoration for the mines.

The state carries out special environmental protection campaigns to regulate the activities of the rare earth industry. In these campaigns, governments at all levels require rare earth enterprises to accelerate the construction of environmental protection facilities, abide by the pollutant discharge standards, and implement clean production. Enterprises that do not meet these requirements shall be ordered to cease production for pollution control in accordance with the law, and shall be closed down if they still fail to meet the standards after the deadline set for them to correct their ways. An overall environmental protection inspection has been conducted since 2011 on all rare earth mines, smelting, separation and metal production enterprises, investigating and punishing rare earth enterprises responsible for polluting the environment. So far, the state has published two lists of a total of 56 enterprises that have met environmental protection standards. As a result, the rare earth industry and its enterprises have been urged to put in more than four billion yuan on pollution control and technology upgrading, markedly enhancing the environmental protection level of the industry. Regarding enterprises that generate heavy pollution, pose environmental hazards, cause strong complaints from the public, or violate laws and regulations on environmental protection, the state will publicize their cases, urge them to rectify their activities within a specified period of time, supervise their rectification process, and take other disciplinary actions necessary in accordance with the law. Governments at all levels will appropriate funds to address ecological damage and pollution caused by tailings and slag, which have been formed over a long period of time.

V. Promoting Technological Advancement and Industrial Upgrading

China makes it a priority to enhance the level of scientific devel-opment and utilization of rare earth products. The state strives to create a favorable policy environment for expediting the technological advancement and upgrading of the rare earth industry, overcoming resource and environmental bottlenecks and providing technological support for the sustainable development of rare earth industry.

The state encourages technological innovation in the rare earth industry. The Outline of the National Program for Long- and Me-dium-term Scientific and Technological Development (2006-2020) lists rare earth technologies as a key field of research and develop-ment to get state support. The state supports basic studies and studies on frontier technologies related to rare earths, as well as the research and development, application and spread of critical industrial technologies, and promotes the establishment of an enterprise-centered, market-oriented technological innovation system that combines the efforts of enterprises, universities and research institutes. China actively develops environmentally-friendly, advanced and appropriate rare earth exploitation technologies, highly efficient mining technologies suited to complex geological conditions, and comprehensive recovery technologies for paragenetic and associated mineral resources, in order to raise the recovery rates and cyclical utilization levels of the resources. The country makes vigorous efforts in organizing research and development of advanced technologies for low-carbon and low-salt discharge, manufacturing of ultra-pure products, membrane separation, recovery and utilization of associated thorium resources, recovery and treatment of fluorine and sulfur in tail gas, recycling of chemical raw materials, and automatic production control, to realize the efficient and clean smelting and separation of rare earth metals. The government guides rare earth production and application enterprises, scientific research institutes and institutions of higher learning to develop deep processing and new material application technologies. It works hard to foster science and technology personnel, strengthen the protection of intellectual property rights, and establish technological standards, in order to create favorable conditions for the development of rare earth technologies.

Over the past few years, China has accelerated the technological transformation of rare earth enterprises, encouraged the use of effi-cient and green technologies for mining and ore dressing, such as in-situ leaching, and advanced equipment to renovate rare earth mines, enhanced their performance in comprehensive resource utilization, ecological restoration, environmental protection and safe production. It has built and improved facilities for the storage and treatment of tailings to protect and make better use of tailing resources. The state also encourages the transformation of existing production lines of rare earth smelting and separation by using advanced equipment and technologies, such as separation without using ammonia, and fuzzy simultaneous extraction technology, in order to reduce the consumption of chemical materials and discharge of the “three wastes,” namely, waste gas, waste water and waste residues. New technologies and equipment featuring low discharge and low energy consumption are adopted to renovate rare earth smelting enterprises, to increase production efficiency, improve product quality and lower energy and material consumption. The state is also accelerating the elimination of ammonia saponification extraction, chloride electrolysis, hydrometallurgical synthesis of rare earth fluoride, and other obsolete processes and capacities. It encourages enterprises to combine technological transformation with merger and reorganization and elimination of outdated capacities, in order to get backward rare earth enterprises to close down, suspend operations, merge with others or change their lines of production.

Readjusting and optimizing industrial structure is a crucial step in promoting the sustained and healthy development of the rare earth industry. The Chinese government exercises strict control over the total volume of rare earth smelting and separation, and will not approve any new rare earth smelting and separation projects except for those state-sanctioned projects of merger and reorganization and for distribution optimum. Existing rare earth smelting and separation projects are prohibited from expanding their scale of production. The state resolutely halts the construction of projects that are undertaken in violation of relevant regulations, and will punish, in accordance with the law, departments and individuals responsible for giving ap-proval beyond their authority and those responsible for building the projects in violation of relevant regulations. China adjusts the structure of processed rare earth products, curtails the excessive consumption of rare earth resources by low-end products, and reduces the output of low-grade processed products that require high rare earth consumption. It aims to follow the international scientific and technological and overall industrial development trend and encourage the growth of high-tech rare earth application industries with high added value. In addition, the state expedites the development of high-performance rare earth materials and devices, including magnetic, luminescent, hydrogen- storage, and catalytic materials, and encourages the application of rare earth materials in the fields of information, new energy, energy conservation, environmental protection and health care. The states encourages enterprises to strengthen innovation in management, establish the modern enterprise system, and accelerate industrial upgrading, in order to transform them into modern enterprises that save resources, protect the environment, follow the path of intensive development and actively fulfill their social responsibilities.

VI. Promoting Fair Trade and International Cooperation

Opening up is a basic state policy of China. In the field of rare earths, China gives simultaneous consideration to both domestic and international resources and markets, and follows a win-win strategy that both ensures a reasonable supply of rare earth products onto the international market and helps protect the environment and resources. China will continue its efforts in promoting fair trade and international exchanges and cooperation in this field.

In view of the needs of protecting the environment and resources and developing in a sustainable way, and after giving overall considerations to the domestic and international markets, the carrying capacity of resources and environment, as well as domestic production conditions, China strictly controls the total volumes of rare earth mining and production, and takes restrictive measures on the mining, production, consumption and export of rare earth products simultaneously. The state sets a reasonable quota for annual rare earth exports that basically satisfies the normal demand of the international market. Meanwhile, China tightens customs control, regulates the management of declarations to be filed by enterprises, and orders rare earth export enterprises to comply with the industrial policies, industry access and environmental standards. The state is reinforcing its supervision and control over export enterprises and the self-discipline of the industry. In accordance with the law, it investigates and punishes enterprises that export rare earth products clandestinely, export products procured from illegal channels or commit other acts disrupting the normal order of rare earth export. In 2011, the state carried out a special campaign to crack down on rare earth smuggling, during which it tracked down 769 tons of smuggled rare earth products and 23 criminal suspects in eight cases. Meanwhile, the state strictly bans the import of rare earth products containing radioactive substances that exceed the prescribed limits.

Regarding rare earth trade, the Chinese government has reiterated on more than one occasion that China will continue its rare earth supply to the international market. The tightened control over rare earth export by the Chinese government is carried out in concert with that over the mining, production and other links of the rare earth industry. This is in alignment with China’s sustainable development and the interests of all countries in the world. China opposes politicizing the rare earth issue, and is willing to strengthen dialogue and cooperation with other rare earth producers and consumers in a constructive and responsible manner, to work together with them in preventing excessive speculation in the rare earth market and solving the resource and environmental problems in the development of the industry. It also hopes that countries and regions with abundant rare earth reserves will make active efforts in developing their own re-sources to diversify the supply and expand rare earth trade in the international market, shouldering together the responsibility of global rare earth supply in order to meet the needs of the sustainable development of the world economy.

In recent years, China has been actively creating a fair and open environment for foreign investment, encouraging foreign investment in environment restoration, waste product recycling, and high-end application development and equipment manufacturing in the rare earth industry. Enterprises from the United States, Germany, France, Canada and Japan have invested a total of 6.1 billion yuan in China’s rare earth industry, establishing 38 sole-proprietorship and joint-venture enterprises. Their products are mainly made for export to meet the needs of the mother countries of these investors. China encourages domestic enterprises to follow international practice and market rules to participate actively in international technological and economic cooperation in the field of rare earths.

China has actively participated in international exchanges in the field of rare earths. It has consecutively established the International Conference on Rare Earth Development and Application, In-ternational Rare Earth Industry Summit, Baotou Rare Earth Industry Forum, and other platforms for academic exchanges. China has taken an active part in activities held by the International Workshop on Rare Earth Permanent Magnets, International Commission on Illumination and other related international organizations. It has conducted bilateral and multilateral exchanges and dialogues on a broad range of issues concerning rare earth with the US, the EU, Russia and Japan, to share information, enhance mutual understanding, and work hand in hand to promote the sustainable development of rare earth science and technology and the rare earth industry as a whole.

The sustained, healthy development of the rare earth industry is crucial to the sustainable use of rare earth reserves as important natural resources of the world, as well as to the protection of Planet Earth, which is home to all mankind. Nowadays, as all countries de-pend on each other for existence and prosperity, they should strengthen cooperation and share responsibilities and achievements. In future, China will adhere to the Scientific Outlook on Development, improve its rare earth policies, reinforce supervision over the industry, and work closely with the international community to safeguard a fair and rational order of the rare earth market, better coordinate rare earth development and utilization with the protection of the environment and resources, and make new contributions to the world’s economic growth and scientific and technological development.