Chinese makes case for rare earth
curbs By Robert M Cutler
MONTREAL - The information office of
China's State Council (government cabinet) has
launched a public defense of the country's rare
earths industry with its first-ever white paper,
"The Situation and Policies of China's Rare Earth
Industry". This publication, which Beijing
officially calls a "white paper", represents one
of the few recently accurate uses of the term.
The designation originated roughly a
century ago to apply to brief research reports
used by the British parliament and bound in white
covers. (It was intended to distinguish them in
this way from the parliament's "blue books", which
were detailed documents bound in blue covers.) And
such a white paper is exactly what the
State Council research
report is.
Rare earths are a set of 17
metals the properties of which have made them
essential to the production of an important range
of modern electronic equipment ranging from mobile
phones to wind turbines to motors for electric
automobiles, not to mention a gamut of
defense-related high technologies.
The
white paper estimates that China holds just under
one-quarter of global rare earth deposits. This
estimate has shocked some people who relied on the
37% estimate by the US Geological Survey, indeed
driving up some share prices in the US and Europe;
those people failed to notice that that still
oft-quoted estimate is six years old.
Nevertheless, China continues for the
present to account for slightly over nine-tenths
of global rare earths production, although this
figure is down from the over-95% proportion that
drew headlines in the past decade and prompted
public debates over "strategic minerals" in the US
and Europe. Increased exploration over the past
six years has discovered quantities in other
locations.
Chinese deposits as a
proportion of the global total are therefore
likely to fall further, as demand will not decline
and shortfalls in global production are projected
at least through the middle of the current decade.
Thus the public attention accorded to the question
has led even to the study of the possibility of
their recovery from undersea mud near geothermal
vents, which Japanese scientists last year
established as technically feasible.
China
announced in 2009 that it would limit export
quotas of rare earths for the period 2010-2015 to
35,000 tonnes per year, then announced in 2010
that the export limit for 2011 would be reduced
further to 14,446 tonnes.
The document
newly published by the State Council intends to
defend China against a diplomatic assault upon
these export limitations and other alleged
barriers to trade, led by the European Union,
United States, and Japan within the rules of the
World Trade Organization (WTO).
Four
months ago after the EU, US, and Japan filed a WTO
complaint against China's export restrictions,
consultations were held among the concerned
parties. Because those consultations did not reach
a conclusive settlement, the complainants have now
formally requested the formation of a WTO dispute
settlement panel.
The EU, US, and Japan
are protesting against conditions that have the
result of forcing companies from there to move
their factories to China in order to retain access
to Chinese rare earths. Last July, they won a
ruling that China had failed to honor other
commitments made during its WTO accession,
illegally restricting exports of other minerals
through duties and quotas.
Rare earths
were not at issue then, but that ruling affected
such raw materials as bauxite (the principal
aluminum ore), magnesium, manganese, various
silicon compounds, types of phosphorus, and zinc.
The new complaint includes molybdenum and tungsten
along with the seventeen rare earths.
At
the time of the July 2011 ruling, the Chinese
commerce ministry vowed to appeal it. The Chinese
defense regarding new but similar rare earths
issue will rest upon WTO provisions permitting
limitations on exports for purposes of
environmental protection and natural resource
conservation.
Thus the State Council's
white paper, an official statement that is
nevertheless not authoritatively binding, takes
that exact line of argument. It reprises and
extends the arguments made at a Beijing press
conference last week by the country's
vice-minister of industry and information
technology, Su Bo.
It is true, as Bo said,
that the mining of rare earth minerals is
exceptionally destructive of the natural
environment. Yet Brussels, which has been most
outspoken on the issue in the WTO context, insists
that Beijing's use of export quotas, higher taxes,
production limits, and tougher emission standards
does not really solve the problem of assuring
sustainable development.
In particular,
the EU asserts that these policies are a cover for
giving Chinese producers, buyers, and
manufacturers an unfair advantage while raising
prices to foreign competitors. As EU Trade
Commissioner Karel De Gucht put it, "China's
restrictions on rare earths ... continue to
significantly distort global markets to the
disadvantage of our companies."
The WTO
proceedings will take years to complete, however,
and in the meantime US, German, and Australian
companies are developing the exploitation of rare
earth deposits in their own countries and abroad.
This is occurring especially in Asia, where
Malaysian politics have recently been embroiled by
Australian plans for rare earths and where German
plans for exploration and development in
Kazakhstan have received rather less attention.
Dr Robert M Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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