Editor’s note: the China Rare Earth Industry Association (CREIA) was established and its first meeting held on April 8, electing Gan Yong, Academician with the Chinese Academy of Engineering as the association’s first president. Aims of establishing CREIA include fostering implementation of Chinese rare earth policies, strengthening self-management of the Chinese rare earths industry and businesses and also providing support for rare earth trade disputes.

■ Five Steps for Rare Earth Industry Development
China strengthened regulation of rare earth mining, separating, smelting and exports in 2011 and such regulation will continue, in five steps, in 2012, according to Su Bo, Vice Minister of the Ministry of Industry and Information Technology (MIIT).
Step 1 – Continuation of Industry Order Regulation
China will continue regulation of rare earth industry order, extending environmental production audits and putting in place stricter environmental requirements for rare earth resource development.
Su Bo, Vice Minister of MIIT, disclosed during the CREIA meeting that the nation will focus specially on illegal mining, production, black market trading, smuggling etc. Stricter environmental requirements will be put in place, including no approval for new prospecting, mining, smelting and separating projects and no expansion of mines or smelting and separating businesses.
MIIT Pledges Continuous Strict Control on Severe Pollution
Illegal and low-efficiency mining and smuggling are still rampant in China. The rare earth resource recovery rate is 60% at SOEs, only 40% at large private businesses and as low as 5% during illegal mining, which causes severe waste of resources and environmental damage, according to Su Bo.
□ Severe Threat
Rare earth mining previously completed following removal of plants with oxalic acid now uses in situ leaching which needs to inject 7 to 8 mt of ammonium sulphate underground to extract 1 mt of rare earth oxides. These poisonous solutions will stay underground, becoming a severe threat to water resources beneath.
□ Black Hole
Rare earth production is actually a “black hole” in China, said Su Bo, citing Jiangxi who leads the Chinese rare earth industry with RMB 6.4 billion of profits in 2011 but also necessitates RMB 38 billion of capital to fix the environmental damage induced just in Ganzhou, a city of Jiangxi.
□ Business of Loss
Rare earth mining is the most active in Ganzhou of Jiangxi Province and North Baotou of Inner Mongolia. Due to devastating processes used to extract heavy rare earth elements, plants were directly removed and the soil beneath polluted by ammonia and heavy metals in Ganzhou. Baotou mainly develops light rare earth elements, which causes relatively less environmental damage. In addition, smelting and separating also cause pollution.
Step 2 – Quicker Mergers
Merger and restructuring is in full swing this year, led by Chalco, China Minmetals, China Nonferrous Metals Mining, Baotou Steel Rare Earth and Ganzhou Rare Earth. MIIT will speed up establishment of rare earth business groups centering on the backbone players. MIIT have been reported planning 2 to 3 rare earth business groups. Details of such plans are still unknown, however, due to complexity.
Step 3 – Rigid Implementation of Production Order
China’s rare earth smelting and separating output dropped 15% last year while export quotas held near 2,4000 mt and even had not been fully used by the end of the year. China will continue such production quota system to maintain stable exports while regulating domestic supply.
Step 4 – Perfection of Legislature
China will continue to regulate rare earth mining and production orders with the help of legislature. For instance, China will publish specific laws on rare earth production and mineral purchasing licenses.
Step 5 – Promotion of Industry Upgrade
According to Xinhua reports, CREIA will provide timely support for relevant departments and local governments to promote self-regulation and protection of rights and facilitate communication among research, production and downstream sectors, thus improving operation efficiency of the industry. CREIA will also provide consulting and training services to encourage industry innovation, to facilitate communication with other countries in line with international practices and WTO rules during trade frictions and disputes. All is for sustainable and healthy development of the Chinese rare earth industry.
China has already finished draft of the White Paper for the rare earth industry, which is expected to be published in April or May, says Chen Yanhai, Raw Materials Chief under MIIT.
■ Targeting Rare Earth Complaints
Established Following Complaints
Asked about WTO complaints against China’s rare earth export control filed in March, CREIA President Gan Yong said CREIA will facility communication, based on international practices and WTO rules, with other countries, to properly handle trade frictions and disputes. It needs not only to properly communicate China’s rare earth policies but also to take up the responsibility of environmental protection as China’s rare earth development “owes the environment too much”.
MOC: Chinese Rare Earth Policies Justifiable
Shen Danyang, Spokesman of MOC, said negotiation concerning WTO complaints about China’s export control for rare earth, tungsten and molybdenum should start soon and emphasized legitimacy of such control.

■Can Rare Earth Prices Stabilize?
Professor: Market Has Stronger Say over Price
Xu Zhongbo, a metallurgy professor with Beijing University of Technology, is against claims that a rare earth industry association will provide more control over rare earth prices because in his eyes the market plays the decisive role in price movements. Nevertheless, Xu acknowledges that an “association” can promote cooperation between North and South China, between upstream and downstream and also communication between the industry and governments.
SMM: Production Licenses to Push Up Prices
Just as rare earth prices were heading for a correction, the Ministry of Environmental Protection published the second lot of qualified rare earth producers, which SMM believes will push up rare earth prices.
Experts: Rare Earth Prices May Stabilize in 2Q on Upstream Regulation
Xinhua has recently reported, citing experts, that rare earth prices may stabilize in 2Q , following 7 months of losses, which have already driven producers to the brisk of loss, and with strengthened upstream regulation to protect environment and regulate supply.
　　
About CREIA
Establishment of a rare earth industry association was firstly proposed by China National Nonferrous Metals Import & Export Corp. and some other rare earth businesses 10 years ago.

MIIT said last July to speed up establishment of a rare earth industry association in the face of disorderly expansion of the industry. CREIA is different from the existing Chinese Society of Rare Earths and is more like CNIA which bridges governments and businesses.

Baotou Steel Rare Earth in Inner Mongolia, Rising Nonferrous in Guangdong and China Minmetals are among 13 heavyweight members, Xinhua said. There are in total 155 CREIA members and the figure will continue to expand.

Gan Yong, Academician with the Chinese Academy of Engineering has been elected CREIA’s first President and Ma Rongzhang the first chief secretary.