The rare earth export dispute reflects the defects of China's five major industries

On March 26th, the World Trade Organization (WTO) announced the report of the expert group on the export management measures of the rare earth, tungsten and molybdenum related products of the United States, the European Union and Japan v. China, and ruled that the export management measures of the products involved in the case were illegal.

According to the WTO rules, China still has 60 days to complain. If it is difficult to change the results, the export quota management system for rare earth, tungsten and molybdenum raw materials may be cancelled.

In the eyes of the industry, in the rare earth export quota dispute, although full of differences and conflicts of national interests, it also fully exposed the defects of China's rare earth industry.

The original intention of the export quota policy

There are 17 kinds of rare earth elements, which are generally classified into light, medium and heavy. Among them, light metals such as bismuth and antimony are widely used in civil fields such as metallurgy, textiles, ceramics, glass and permanent magnet materials; medium and heavy rare earth metals such as bismuth, antimony and bismuth are required for cutting-edge industrial fields such as laser, nuclear industry and superconducting. It is a precious strategic resource and is called "industrial vitamins".

In 2012, the White Paper on China's Rare Earth Status and Policy issued by the State Council Information Office showed that China's rare earth reserves accounted for about 23% of the world's total reserves. However, China has undertaken more than 90% of the supply of rare earths in the world market, even more than 97%.

As the first major producing country and exporting country of rare earth, the development of China's rare earth market was once chaotic. The overcapacity of domestic rare earth mining is very serious, causing serious waste of resources and ecological damage. Disorderly competition makes rare earths known as “industrial gold” sold as “cabbage prices”. In stark contrast to this, countries such as the United States and Australia, which are rich in rare earth resources, have restricted and stopped the mining of rare earths and imported them from China.

Zhang Anwen, deputy secretary general of the China Rare Earth Society, told the China Economic Weekly that the complaints against China's rare earth export quota system and the WTO's ruling were "unexpected and reasonable."

As early as 2001, in the WTO accession negotiations, in order to join the WTO, China has cancelled the export quotas for most products within the prescribed time limit according to the commitment. The data released by the Ministry of Commerce shows that between 2001 and 2009, The export volume of rare earth products in China is maintained between 40,000 and 80,000 tons. In order to further standardize the development of the rare earth industry, in 2009, the Ministry of Industry and Information Technology formulated the "Special Plan for the Development of Rare Earth Industry (2009-2015)", clearly stating that the annual export of rare earths in 2009-2015 should not exceed 35,000 tons. In 2010, export quotas began to fall to 30,258 tons.

Zhang Anwen said that taking the medium-heavy rare earth mining in the southern part of China as an example: in order to get 10,000 tons of medium-heavy rare earth oxides, 100 square kilometers of vegetation damage will be caused, and the cost is shocking. "China's contribution and acquisition are serious unequal and unbalanced." Zhang Anwen bluntly said that protecting the resources and environment and standardizing the industrial order is the original intention of the Chinese government to implement protective policy measures for the rare earth industry.

"Although China's rare earth export quota system was finally convicted of violations, after full defense and evidence, the WTO expert group recognized that China's policy objectives are still to protect the environment, resources and sustainable development, in line with the WTO's special rules. Zhang Anwen said.

The industry behind the "cabbage price"

The introduction of a series of policy measures has effectively regulated the market of rare earth industry in China. China's rare earth has changed the status quo of "gold selling cabbage prices" in the international market. But for foreign companies that are accustomed to consuming China's cheap rare earths, their interests have been affected.

Earlier, Wang Yuhui, assistant to the president of China Minmetals Corporation, said in an interview with China Economic Weekly that in the past, China's rare earth industry sold raw materials and did not pay attention to back-end applications. For 1 yuan of rare earth raw materials, we can sell up to 10 yuan and 20 yuan for rough processing. After we make products in Europe and America, we will spend 1,000 yuan to buy them back.

"Why do we sell cheaply, but when we buy it, it is so expensive?" Zhang Anwen said frankly to "China Economic Weekly" that being behind the people is a lot of drawbacks in the development of the rare earth industry.

Zhang Anwen said that China's rare earth industry is one of the few industries in China with certain international competitiveness. With the support of the state's policies, relying on its own resources and technical strength, it has achieved good development from rare earth mining, smelting, and environmental protection.

However, China is a "rare earth country", but it is not a "rare earth power." The rare earth industry itself has very prominent problems and is concentrated in five aspects. First, the overcapacity in rare earth mining and smelting is serious. The ratio of production capacity to output (ie, excess coefficient) of rare earth oxides is about 3.2, which is much higher than the excess coefficient of industries with excess capacity of steel and cement. Second, high prices and high profits. Driven by mining and smelting separation, environmental pollution and ecological damage are costly; third, private mining and mining, rare earth smuggling is serious, rare earth prices are affected by non-market factors for a long time; fourth, industrial concentration is not enough; fifth The development of rare earth downstream industries in China is a weak item, and it is more serious in the application of rare earth materials such as “nuclear high base”.

Rare earth prices are stable

If the complaint is still not satisfactory, China will have to amend the relevant export restrictions. Will this have a big impact on the rare earth industry?

"The game of rare earth depends largely on price." Zhang Anwen told China Economic Weekly that in the short term, the rare earth market may form a certain degree of price fluctuations. The large fluctuations in the prices of rare earth products are not a boon for the development of the downstream industry chain.

"The most feared that the price of rare earths has skyrocketed." The head of the marketing department of Shenzhen Tianli and Magnetic Industry Co., Ltd. told China Economic Weekly that the company has established a NdFeB permanent magnet production base in Zhangzhou, engaged in the deep processing of rare metals and the production of ferroniobium. Boron, magnetic button, and other magnetic products. From 2011 to 2012, the price changes of rare earth raw materials like roller coasters have put a lot of pressure on enterprises in the whole industry. Due to the skyrocketing of rare earth raw materials, the profit of deep processing is even less than the profit of raw material mining. In the past, the rise of rare earth materials in the past many people are doing magnetic materials, people who have nothing to do with rare earths have begun to do this industry, and now many companies have a serious overcapacity to cut production and insured prices. Demand-side companies are turning to other alternative materials to combat the application of magnetic materials.

"Rare earth prices, the stability of the first." Zhang Anwen told China Economic Weekly that the most taboo of industrial development is the sharp fluctuations in raw material prices, which is not beneficial for the further development of rare earth downstream industries and the promotion of rare earth materials. A relatively stable price formation mechanism for rare earth products should be established to provide a stable enterprise market environment for downstream application enterprises.

Since 2013, China Rare Earth Industry Association has released the price index of rare earth industry in the form of price range, which is formed by the daily transaction price statistics of 25 representative sample companies in the industry. Maintaining industry operations through price indices inhibits the impact of capital speculation.

Zhang Anwen also reminded enterprises that the current international environment for the development and utilization of rare earths abroad is worthy of attention. Countries such as the United States, Australia, India and Russia are rich in rare earth resources. In 2013, Greenland abolished the ban on mining of uranium and rare earth mines, allowing domestic and foreign mining companies to exploit mining resources in the Arctic region of their borders. This means that in the future, a diversified international rare earth supply system will be formed worldwide.

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