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China's Rare Earth Reserves Only Available for 20 Years China has recently released Comments on Accelerating Sustained and Healthy Development of the Rare Earth Industry (hereinafter referred to as Comments). Comments points out that China will strictly control the export of rare earth metals, oxides, salts, rare earth ferroalloys and other primary products while strictly controlling the total volume of rare earth exploited and produced. Besides, restriction in terms of exploitation, production, consumption and export will be taken synchronously. 
Previously, China restricted rare earth export based on environmental pollution and other reasons, which was accused by some countries. They thought that China's restriction on rare earth export had possibly violated WTO principles. Japan will try to exert pressure on China through WTO in order to urge China to relax export restriction. 
As a non-renewable mineral resource of strategic importance, rare earth is increasingly widely applied in new energy, new materials, energy saving and environmental protection, aerospace, electronic information and other fields. China is both the largest rare earth producer and the largest rare earth exporter. The introduction of Comments aims at controlling the exploitation pace of non-renewable resources and avoiding excessive depletion. The policies and measures of restricting rare earth export in China are in line with WTO principles. 
Since 2005, China's rare earth output has exceeded 100,000 tons for 5 consecutive years and was up to 124,800 tons in 2008. Statistics from the Ministry of Industry and Information Technology indicates that in 2008, global rare earth consumption was about 130,000 tons and in 2009, China's rare earth oxide output was 120,000 tons, accounting for 97% of global total. In 2011 Q1, China's output volume of rare earth and rare earth products was 12,941 tons, increasing by 27.40% YOY, and the output value reached USD 710.49 million, ascending by 691.20% YOY. 
Relevant statistics show that China's rare earth reserves only remain 27 million tons, whose proportion in global reserves declined from over 70% previously to 30% currently. According to the existing production rate, the reserves of medium and heavy rare earth in China can be available for only 15 to 20 years. China is not the only country with rare earth resources, but it acts as a supplier of the majority of rare earth in the world at the expense of destroying its natural environment and consuming its own resources.Source:
In addition to disorderly smelting, exploitation and smuggling, backward technology is also a major reason for China's lack of pricing power. However, many foreign countries implement the conservation policy for rare earth resources. Japan only applies 1/3 of imported rare earth in production and the rest is used as strategic reserves. 83% of Japan's rare earth is imported from China, while it is estimated by industry insiders that rare earth reserved in Japan is enough for 40 to 50 years. 
Targeted at standardized exploitation of China's rare earth resources, Comments proposes to implement stringent protective exploitation policies and ecological environment protection standards, substantially raise the collection standard of the rare earth resource tax, strictly control export of primary products, establish strategic reserves of rare earth, and carry out specific rectification of rare earth. 
The main purpose of restriction on exploitation, smelting and export of rare earth is to strengthen environmental protection and conserve exhaustible resources. The export quotas adopted by China are implemented in the links of exploitation, production, processing and export in parallel according to WTO rules and its core purpose is to protect environment. 
It is reported that the Ministry of Commerce responsible for rare earth export quotas has already considered the relevant requirements of WTO. The Ministry of Commerce will not greatly reduce the rare earth export quotas all of a sudden, so as to prevent China from being at a disadvantage in trade disputes. Seen from the domestic management and control policies for rare earth in the recent half year, the Chinese government is more inclined to regulate quotas by controlling output. 
Based on supply and demand trends of global rare earth resources and the situation of reduction in China's rare earth reserves, China will implement the following policies: First, strengthen macroeconomic control, further regulate the exploitation order, and improve the recovery rate and the utilization rate of rare earth resources; second, continuously raise the level of production technology, make efforts to protect the ecological environment and leave no future troubles for descendants in the exploitation process; third, increase R & D investment, enhance scientific and technological innovation ability, master the core patents and improve core competitiveness, gain the discourse power and the pricing power in the international market, and improve the overall economic and social benefits. Meanwhile, the reservation system must be established.