Baotou Mulls Rare Earth Reserve Center

BAOTOU, May 8 -- Baotou, an industrial city in northwestern China's Inner Mongolia Autonomous Region, may establish China's first state-level reserve center to protect valuable earth resources from low-level exploitation.

    As a start, the city is building a new high-tech zone for its rare earth industry and inviting investments.

    Rare earth elements are a collection of seventeen metals that are corporated into many modern technological devices including superconductors, miniaturized magnets, electronic polishers, refining catalysts and hybrid car components.

    China ranks first in the world in terms of reserve, production, consumption and export of rare earth resources. Yet the country's wealth of rare earth resources is in stark contrast with the lack of innovation and development capacity for high-end products in this field.

    On the other hand, Japan and the U.S. imported stocks of these resources and deep processed them for large profits.

    From 1990 to 2005, China's export volume of rare earth resources saw a ten-fold surge, but the average price was squeezed to only 54 percent of what it was at the beginning of that time.

    Statistics show that China accounted for some 70 percent of the world's known rare earth resources, and the city of Baotou's nearby Baiyunebo rare earth deposit accounted for some 87 percent of China's total. That means Baotou has some 62 percent of the world's known rare earth resource.

    While appealing to the central government to consider establishing a nationwide rare earth reserve mechanisms, the city is not idly standing by. It is building China's first industrial park dedicated to the rare earth industry.

    "Our goal is to terminate this situation of disorderly exploitation, the lack of price controls and the low-price selling of the rare earth elements." said An Sihu, an administrative assistant at the new- and high-tech zone.

    The new- and high-tech zone is backed by the Inner Mongolia-based Baotou Steel Group, which owns a controlling stake of 70 percent.

    In recent years, many industry experts have been calling for the establishment of a state rare earth reserve mechanism, which they believe can result in a rare earth industry with order and added-value. An is one of them.

    "Unreined competition between Chinese miners resulted in an oversupply in the international market, and foreign buyers have the final say on rare earth prices." An said.

    As long as foreign companies can secure abundant rare earth supplies at low prices, the idea of exchanging resources and advanced technology to help develop China's own rare earth industry through high value-added products can never materialize, An said.

    In An's opinion, three state reserve centers should cover all the main rare earth deposits in China: one headed by Baotou Steel in northern China, one headed by China Aluminum Corporation in Sichuan and one headed by China Minmetals Corporation in Jiangxi.

    "We have been advocating a reserve mechanism. Actually, we have started to build it. The setup of the new- and high-tech zone is our first step." An said.

    (Source: CRIENGLISH.com)