China to Strike Hard Against Illegal REE Mining

Reuters

China will "strike hard" against the illegal mining, exporting and smuggling of rare earth elements (REEs) to impose discipline on an increasingly strategic sector, the industry minister said on Monday.

In a statement published on the website of the Ministry of Industry and Information Technology, Miao Wei said China's rare earth resources had been put under increasingly heavy pressure as a result of surging domestic and global demand.

China produces 97% of global rare earths—17 elements used in key industries like defense and renewable energy—and recent moves to cut export quotas and restrict production have caused alarm on the global market.

Miao, speaking at an industry meeting Monday, defended the restrictions, saying that rare earths were a strategic resource.

"Since the turn of the new century, along with intensifying global competition in new technologies, the strategic position of rare earths has become increasingly important, and they are receiving more and more attention from every country," he said.

China has insisted that the high level of output was unsustainable and that its environment was suffering due to overproduction. It also has justified the crackdown as a way of guaranteeing supplies to its own industries.

China cut export quotas by 35% for the first half of 2011 and capped total rare earth oxide output at 93,800 tons for the year, while cracking down on illegal production.

China also has sought to increase its pricing power over REEs, announcing last week that it would create a state-owned monopoly in Inner Mongolia, where the bulk of production is concentrated.