China’s Indirect REE Control?

The newspaper China Business News reported Monday that only 56 of more than 350 rare earths producers had met environmental standards. It cited officials in Jiangxi province, where much of the mining is concentrated, as saying that the estimated costs for environmental repair, at 38 billion yuan ($6 billion), were much higher than profits earned over many years.

Today is day one of China’s new Rare Earths Industry Trade Association. A domestic cartel association it seems to me, although on day one it’s not possible yet to see if it walk’s like a cartel, quacks like a cartel, but it certainly looks like it’s intended to be a cartel, at least as seen from London. Suspicious old me, perhaps, but unlike real trade associations like REE World, where there’s no pre set agenda, just a meeting of minds of the industry’s finest, this new Chinese industry group looks suspiciously like how China intends to control their domestic REE industry once they lose the recently filed complaint at the World Trade Organisation.

With policy set in Beijing, for the benefit of China and the people of course, it will be a foolhardy Chinese company that tries to buck the new industry trade body.  As a hint of where the new trade body is likely headed: “The newspaper China Business News reported Monday that only 56 of more than 350 rare earths producers had met environmental standards. It cited officials in Jiangxi province, where much of the mining is concentrated, as saying that the estimated costs for environmental repair, at 38 billion yuan ($6 billion), were much higher than profits earned over many years.”   Regulation and stiffled competition seems likely to come next, I think.

Another siren call to the west to get some non-Chinese REE supply up and available fast.  How many times does China have to warn about their  over supplying REEs to the rest of the world before we take notice?

China Sets up Rare Earths Industry Group
SHANGHAI April 9, 2012 (AP)

China has set up a rare earths industry association to fend off trade complaints and help regulate the sector that is critical to global high-tech manufacturing.

The Ministry of Industry and Information Technology announced the group’s founding Sunday, saying it would coordinate mining, smelting and processing and seek to form a “reasonable price mechanism” for the materials, used in many high-tech applications.

It said the group would help coordinate China’s response to rare earth trade disputes such as a complaint alleging unfair market manipulation that was filed last month by the U.S., EU and Japan at the World Trade Organization.

—- Beijing has imposed limits on rare earths production and exports, citing a need to impose order on an unruly domestic market and to reduce environmental damage, raising protests from Japan, the U.S. and other countries that rely on supplies from China.

A key aim is to rein in wide swings in prices, said Heng Kun, a rare earth analyst at Essence Securities, based in Beijing.

—- “Many countries in the world have rare earth reserves, you cannot rely on China alone to provide all the supplies,” the official Xinhua News Agency quoted the newly appointed head of the industry group, Gan Yong, as saying.

The rare earths association includes 155 companies, including state-owned giants like Aluminum Corp. of China and China Minmetals Corp., the ministry said in a statement on its website.

Typically for China, central government policies aimed at curbing unlicensed mining and processing of rare earths had often gone unheeded by local level officials focused on maximizing tax revenues and creating jobs.

The new group could help regulators indirectly impose more “self-discipline” on the industry, Heng said.