China sets tougher restrictions on illegal mining, exporting of rare earths

Baotou City: Epicentre of China’s rare earth industry.

China is stepping up efforts to restrict illegal mining and exporting of rare earths with a five-month campaign that ultimately aims mainly to avoid a further plunge in prices.

Launched earlier this month and until March 31, five official bodies will work together to investigate and punish illegal miners and smugglers of the highly coveted elements.

Provincial and city governments will supervise the effort, Investor Intel reports.

This is not the first time China attempts to streamline the rare earth industry by giving control to state-owned miners and setting production quotas on a small number of authorized companies.

However measures implemented in the last few years have failed to reduce pollution, smuggling, and illegal mining in China’s rare earth industry.

The Asian giant says it holds 23% of the world’s rare earth reserves, but foreign estimates allege China really has about a 40% of the global reserves and provides over 90% of the world’s demand.

The U.S., Europe and Japan have all submitted complaints to the World Trade Organization declaring that China’s production and export quotas are restricting supply to the global market, therefore giving Chinese companies an unusual competitive advantage, though Beijing maintains its actions are due to environmental reasons.