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UPDATED: October 11, 2010 NO. 41 OCTOBER 14, 2010
China Not the Only Rare Earth Exporter

In terms of the industrial chain, great progress has been made in luminescent, permanent magnetic, hydrogen-storage and catalytic materials in the middle of the chain. At present, development of our downstream industries is restricted by many factors. Besides core technologies, there are restrictions such as advanced manufacturing technologies and system integration technologies. Such a situation exists in all other industries, and China's overall industry and technology standardization still need to be improved.

Big mergers

Exactly what are the measures has China adopted in reorganizing the rare earth industry? What difficulties is it facing? How will these measures affect present industrial chains?

Wang: This time the government will treat light rare earth industries differently from medium and heavy rare earth industries. State-owned and state-holding enterprises should take the lead in developing and protecting resources with advanced mining and smelting technologies. They should also be strong enough to carry out research on future applications.

Lin: Reorganization of the rare earth industry may be restricted by different interests of various parties involved, so the process won't be smooth. At the moment, the government must push forward reorganization through policy. The pattern of merger and acquisition by big companies and big capital can be extended.

Reorganizing the industry will help stabilize the market and promote the sound development of downstream industries, but the government should also prevent monopoly and pressures on downstream industries imposed by exorbitantly high prices of rare earth products.

While China is fixing pricing for rare earth, besides formulating a uniform pricing mechanism, what other measures will be adopted? What difficulties will there be in fixing pricing?

Lin: We can draw on iron ore experiences, concentrating resources in several big companies and setting up alliances, or organizations such as the Organization of Petroleum Exporting Countries. Companies, instead of the government, should be the mainstay of the rare earth industry. When the United States complains of China at the WTO, it is complaining about the Chinese Government. If companies are complained about, the government can act as the third party to resolve disputes. Therefore, to settle disputes, the government should not be one of the parties involved, but a third party.

No significant influence

Foreign countries are actively seeking alternative resources and again preparing to mine rare earth. How will China's rare earth industry be affected?

Wang: It's better they exploit their own rare earth resources. Except that rare earth prices may be influenced, Chinese companies won't be affected.

Lin: If there is any impact, the demand for China's light rare earth may decline, but medium and heavy rare earth companies won't be seriously affected, because there is light rare earth in many countries and regions. But China should now pay attention to controlling the outflow of rare earth smelting and separation technologies and everything related to it. In the meantime, China can consider investment in overseas rare earth resources and expanding its market share.

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