Arafura Resources NL (ARAFF)

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China Says It Will Tighten Controls on Rare Minerals
By DAVID BARBOZA

Published: June 2, 2010

http://www.nytimes.com/2010/06/03/business/global/03rare.html

SHANGHAI — China is planning to tighten its control over its rare earth minerals by allowing just a handful of state companies to oversee the mining of the scarce elements.

Rare earth minerals are vital for electric motors in hybrid cars, wind turbines, efficient light bulbs and even missiles. China accounts for more than 90 percent of the world’s production of the minerals.

The State Council, China’s highest legislative body, is weighing a proposal to put the government in control of private and unauthorized mines that produce rare earth minerals, China Daily, the government-controlled English-language newspaper, reported on Wednesday.

Some governments and global companies have recently expressed concern about whether China plans to restrict exports of rare earth minerals or require foreign companies to move factories to China to complete production of items using them.

Last year, China distributed a draft policy to foreign executives that called for prohibiting the export of some of the minerals that are in the shortest supply and happen to be mined mainly in southeastern China using some of the most environmentally damaging techniques. That led to a scramble to develop alternative mines in other parts of the world.

But Chinese officials say they want to tighten control over the precious resource because the mining has led to environmental ruin and chaotic development.

Industry specialists in China say large supplies of its rare earth minerals are illegally exported and highly undervalued, and that foreign companies are not paying for the environmental damage caused by mining.

“We want a higher price on our rare earth minerals,” said Zhang Anwen, deputy secretary general of the Chinese Society of Rare Earths, a government-affiliated research organization in Beijing. “Foreign buyers should more or less share our costs, including the high cost of reducing environmental pollution.”

Ian Chalmers, a managing director at Alkane Resources, a rare earth mining company in Perth, Australia, said that China had been planning such a move for years, partly to manage the devastating pollution generated from mining the minerals.

“This could help their environmental credentials and show they’re cracking down on illegal behavior,” Mr. Chalmers said in a telephone interview Wednesday.