China sells rare earth for absurdly low prices
Staff Reporter 2014-04-06 12:48 (GMT+8)
A rare earth excavation site in Xinfeng, Jiangxi province. (Photo/Xinhua)
A rare earth excavation site in Xinfeng, Jiangxi province. (Photo/Xinhua)
China provides more than 90% of the world's rare earth materials, but without price fixing rights, it has to sell them for rock bottom prices, the Shanghai-based China Business News reports.
"One yuan worth of rare earth elements, after rough processing, can be sold at around 10 yuan (US$1.60) to 20 yuan (US$3.25) at most, but once they are sold to Europe and the United States for deep processing, we need to spend 1,000 yuan (US$160) to buy them back," said Wang Jionghui, assistant president of China Minmetals Corporation.
Such an imbalanced phenomenon has forced China to make up its mind to restructure the rare earth industry, implementing the quota system for rare earth as a control based on concerns over environmental protection and resources.
The nation's way out is not integration of the rare earth industry, but on the transformation of rough processing into deep processing, said an unnamed senior executive of an Inner Mongolian rare earth enterprise.
China has three major production bases for rare earth materials, and two major production systems. Following the government's policy, the industry has shown more density in recent years, but the downstream application sector has been progressing slowly.
The sharp fluctuation in prices of rare earth elements has seriously dampened the downstream processing sector, thus making many rare earth firms prefer to sell the raw materials than selling processed products, insiders said.
The other main concern in the industry is the overcapacity created after overlapping construction.
For example, although China's is the world's biggest producer of rare earth elements, its market share in high performance permanent magnetic materials is less than 10%. Many provinces, despite lacking resources and core technology, are still heavily invested in NdFeB magnet projects — thus creating overlapping competition.
Currently, the nation's rare earth processing industry focuses on the NdFeB magnet, light emitting materials and NiMH batteries and rarely touches other areas, thus creating a homogenized production base which seriously restricts the application of rare earth.
China should strengthen the end applications of the rare earth industry, focusing on developing key technologies that can create higher added value to reverse the current trend of just selling rare earth materials abroad for a cheap price, experts said.
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