Time to put the latest “news” about China and rare earths in some perspective. Earlier this week, China Daily ran a story that Graeme Irvine posted here. It was rather confusing; then I noticed that at the end there were the words “Bloomberg contributed to this report”. Then Mineweb took up the story and added its own embellishments. Things by this stage were starting to become blurred.
I looked back at Helen Yuan’s original for Bloombergl (she’s based in Shanghai). Her report began with the words: “China, the biggest supplier of rare earths, may almost double exports this year and meet quotas set by the government as lower prices stimulate demand.”
That is, indeed, huge news. The high-tech industries of the Western world can sleep easy. If only it were true.
Hold on, though. Two sentences later: “Overseas sales quotas may be virtually unchanged this year at 31,130 metric tons, based on Bloomberg calculations.”
Helen, can we can just pause there for a moment?
How can it be that China “may almost double exports this year” and “overseas sales quotas may be virtually unchanged”?
In fact, there’s nothing new in this report as, when you read on, you get to the point.
Bloomberg says the Chinese government allocated 10,546 tonnes of first-round export quotas to nine companies that met the government’s environmental protection standards, she quotes the Ministry of Industry and Information Technology saying, then adds that “another 14,358 tonnes may be granted to 17 other companies, including Baotou Iron & Steel Group“. Here we’re talking about the companies that have yet to get environmental clearance. We know all this.
She goes on to quote a ministry spokesman Wang Caifeng saying “Baotou will be able to get the license to resume exports this year,” Wang said. “It’s just a matter of time as it takes a while for the government to review the company’s environmental improvement.” Yes, exactly. Cancel the red alert – this story is nothing but old news rehashed and made confusing.
Then China Daily takes up the story. It becomes clear that this is a bit of spin out of Beijing. Wang is very reassuring: she states that “China’s crackdown on illegal exploration for the valuable minerals and other measures the country has taken to regulate the industry have not reduced the supply of rare earths to the global market.” How’s that? The official quotas remain, and they’ve allegedly cut off the illegal mining and smuggling, and the quantity of REE going abroad has not been reduced?
Then, further down in the China Daily piece, “the official said China will not lift the export quotas in the short term, especially since environmental issues and illegal exploration must be dealt with.”
These days, it appears, anyone can write a report about rare earths – and anyone does.
Nothing has changed. These reports are based on misunderstandings at source.
They also appear to be totally unaware of the fact that the quotas were changed this year. Sure, the total is about the same but the fact that all miners are allowed only 15 per cent of their export quotas for heavy rare earths will, as we have pointed out, mean a crunch for HREE. The HREE exporters will not be able to fill their 85 per cent allocation of LREE, and the HREE quotas are useless in the hands of LREE producers.
China will not export any more HREE as it (1) wants them to form the basis for more high-tech industries inside China, (2) wants to conserve its resources for as long as possible, and (3) will not do anything to encourage prices to fall further.
Nothing has changed. China to double REE exports? Give me a break.