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People's Daily Online>>China Business

Consolidation to create rare-earth 'giants'

By Wu Jiao and Wei Tian (China Daily)

10:09, March 12, 2012

Minister of Industry and Information Technology Miao Wei (center) surrounded by journalists at the Great Hall of the People in Beijing on Sunday during the fourth plenary meeting of the Fifth Session of the 11th National People's Congress. (Jiang Dong / China Daily)

China will establish two or three large rare-earth enterprises by consolidating companies in the sector, said a top industry official on Sunday.

Miao Wei, minister of industry and information technology, said on the sideline of the annual national legislative session that China will retain limits on rare-earth export quotas after the industry rationalization.

Miao said the first large rare-earth enterprise had already been created in the Inner Mongolia autonomous region by consolidating 14 related companies under the leadership of Baotou Steel Rare-Earth Hi-Tech Co.

Miao didn't give a timetable for the nationwide restructuring, but a statement issued in February last year said that over a five-year period, China would regulate the industry to ensure "reasonable exploration and orderly production".

Export quotas were introduced to prevent smuggling and illegal exploration in the ill-regulated industry.

Although its rare-earth deposits account for only 35 percent of the world's total, China remains the world's largest rare-earth exporter. It accounts for more than 90 percent of global output of the 17 rare-earth metals, which are used in the electronics, defense and renewable energy industries.

The country said last year it would tighten up regulations on exploration, processing and environmental protection related to rare-earth exports, with officials saying that the move was primarily motivated by environmental concerns and was in compliance with World Trade Organization rules.

According to Miao, after the rationalization, export quotas will be set in accordance with the annual production amount, which is also in line with WTO rules.

Miao said that the rare-earth export quota in 2012 would be the same as in 2011. The full-year quota for 2011 was 30,184 tons, but actual exports amounted to just half of the quota.

Tougher regulations and a halt to illegal exploration meant rare-earth output declined last year and prices rose, leading to a sharp fall in consumption by foreign companies, Miao added.

"It is totally groundless to blame China for not selling or controlling rare-earth exports. The fact is that many foreign firms are cutting their usage," said Miao.

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