1、 Chinas Rare Earth Elements Industry: What Can the West Learn? By Cindy Hurst Corporate Author: INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY WASHINGTON DC Personal Author(s): Hurst, Cindy Report Date: MAR 2010 Pagination or Media Count: 43 Institute for the Analysis of Global Security (IAGS) U.S. A
2、rmy Foreign Military Studies Office, 731 McClellan Avenue, Fort Leavenworth, KS, 66027 Cindy Hurst is an analyst for the U.S. Armys Foreign Military Studies Office, Fort Leavenworth, KS Introduction China controls approximately 97 percent of the worlds rare earth element market. These elements, whic
3、h are not widely known because they are so low on the production chain, are critical to hundreds of high tech applications, many of which define our modern way of life. Without rare earth elements, much of the worlds modern technology would be vastly different and many applications would not be poss
4、ible. For one thing, we would not have the advantage of smaller sized technology, such as the cell phone and laptop computer, without the use of rare earth elements. Rare earth elements are also essential for the defense industry and are found in cruise missiles, precision guided munitions, radar sy
5、stems and reactive armor. They are also key to the emergence of green technology such as the new generation of wind powered turbines and plug-in hybrid vehicles, as well as to oil refineries, where they act as a catalyst. (Note: for more in-depth information on the specific uses of rare earth elemen
6、ts, refer to Appendix A). Over the past few years, China has come under increasing scrutiny and criticism over its monopoly of the rare earth industry and for gradually reducing export quotas of these resources. However, China is faced with its own internal issues that, if not addressed, could soon
7、stress the countrys rare earth industry. This paper is designed to give the reader a better understanding of what rare earth elements are and their importance to society in general and to U.S. defense and energy policy in particular. It will also explore the history of rare earth elements and Chinas
8、 current monopoly of the industry, including possible repercussions and strategic implications if rare earth elements supply were to be disrupted. The Issues China Faces According to Zhao Shuanglian, Vice Chairman of Inner Mongolias Autonomous Regions, “Rare earth is a unique treasure, and it is als
9、o Inner Mongolias primary strategic resource.”While China possesses approximately 57 percent of the worlds reserves of rare earth elements, the industry within China is plagued with disorderly development and poor management practices. The Chinese government fears that if the current poor mining pra
10、ctices and lack of regulation continue, China will “become a rare-earth poor country, or even a country without rare earth elements.”Other issues facing Chinas rare earth industry are smuggling and illegal mining activities, environmental damage due to poor mining practice, and the growing challenge
11、 of ensuring its own domestic needs of rare earth. Smuggling According to China Business News, due to the annual increased demand for rare earth elements, many buyers are resorting to smuggling rare earths out of China. In 2008, approximately 20,000 tons of rare earth were reportedly smuggled from t
12、he country. Meanwhile, during that same year, according to official customs statistics, China exported 39,500 tons of rare earth oxide. This means that smuggling accounted for one-third of the total volume of rare earths leaving China. One aim of Chinas “Rare-Earth Industry Development Plan of 2009-
13、2015” is to try to curb some of the smuggling by introducing regulations and policies to punish the smugglers. Smuggling is potentially detrimental to Chinas rare earth industry because it keeps prices low and depletes resources quicker. Smuggling also indicates a severe lack of control over the ind
14、ustry and can lead to even greater repercussions such as more damage to the environment. Regulations on safe mining practice are nearly impossible to enforce in this type of environment. As it is, because of poor management practices and the large scale of the industry, China already has difficulty
15、in enforcing regulations to improve safety and environmental measures in its rare earth industry. Severe environmental damage A major concern surrounding Chinas practice of mining rare earth elements is the negative impact it has to the environment due to lax mining practices. There are a number of
16、potential environmental implications to mining rare earth elements if not done properly. Unfortunately, because of the revenue potential, many rare earth mines have been operating illegally, with no regulation, causing severe environmental hazards, which exacerbates the problem. In 2005, Xu Guangxia
17、n wrote that thorium was a source of radioactive contamination in the Baotou area and the Yellow River. According to a local source, who asked not to be identified, “In the Yellow River, in Baotou, the fish all died. They dump the waste the chemicals into the river. You cannot eat the fish because t
18、hey are polluted.” Some 150 million people depend on the river as their primary source of water. Under traditional technology means, refining rare earth elements requires such chemicals as ammonium bicarbonate and oxalic acid. The potential health hazards of ammonium bicarbonate include: Irritation
19、to the respiratory tract if inhaled, irritation to the gastrointestinal tract if ingested, redness and pain if it comes in contact with the eyes, and redness, itching, and pain if it comes in contact with the skin. Oxalic acid is poisonous and potentially fatal if swallowed. It is also corrosive and
20、 causes severe irritation and burns to the skin, eyes, and respiratory tract, is harmful if inhaled or absorbed through the skin, and can cause kidney damage. These and other chemicals often find their way into the Yellow River. Safety standards in China are lax. “People in their 30s have died of ca
21、ncer working around the mines, possibly from radioactive materials,” said one local source. “I visited a factory many times. When I visit a factory or workshop, I tell the director of the workshop, would you tell the laborers to put their mask on when they are doing their job? He said, Oh yeah. We do every time, but its too
