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Rare earth resources "forced" to deep processing
In 2007, the rare earth industry experienced a pivotal transformation. The Chinese government shifted its approach from a directive-based to a more mandatory regulatory framework. This included imposing a 10% export tariff on rare earth products, accelerating the elimination of outdated and polluting production capacities, and limiting foreign investment in domestic rare earth extraction. These measures aimed to address long-standing issues such as resource mismanagement, uncontrolled development, waste, and environmental degradation.
According to the Inner Mongolia Rare Earth Industry Association, China has long been the world's largest producer of rare earths, accounting for over 90% of global output for many years. However, much of this output was in the form of raw materials or low-level processed products, leading to significant losses and environmental damage. Many foreign companies purchased these raw materials in China and then exported them for further processing, turning the issue into a recurring problem. In 2007, this trend began to change as the government raised export barriers, curbed rapid growth, protected resources, and promoted efficiency in the industry. Export prices rose significantly, and the market started to see improvements in regulation and environmental protection. More companies also began focusing on deep processing, aiming to add value and reduce waste.
Currently, regions rich in rare earth resources are actively developing their local industries. They are investing in downstream industrial chains and attracting both domestic and foreign capital and technology. For example, the Baotou municipal government launched policies to strengthen the supply of rare earth raw materials and accelerate industrial development. It encouraged companies within the Baotou Hi-Tech Zone to process rare earths at preferential prices, aiming to build industrial bases in areas like permanent magnets, hydrogen storage materials, and energy-saving lamps.
Jiangxi Province implemented a "restricted export, incentive input" policy, prioritizing the use of rare earth resources for technological development and encouraging foreign investment in advanced processing. Other provinces, including Sichuan and Hunan, have also outlined plans to extend the rare earth industrial chain and develop regional clusters.
Globally, China’s rare earth resources and cost advantages have attracted foreign processing industries. With restricted exports, rare earth separation projects have become key areas of limited international cooperation. As a result, foreign companies have accelerated their movement to China, bringing advanced technologies and manufacturing capabilities. In 2007, a large portion of global electronics, including LCD monitors, notebooks, and TVs, were produced in mainland China. The growing auto industry also led to increased foreign production of DC motors and exhaust purifiers. Companies like Japan’s TDK, Showa Denko, and European firms like VAC and NEOREM established operations in China, contributing to the globalization of China’s rare earth industry.
Domestic enterprises have also stepped up their efforts in deep processing. Leading companies are enhancing their R&D and production technologies, moving toward higher-value applications. For instance, Qingdao Yikesi developed a rare earth isoprene rubber line, while Inner Mongolia Leopold achieved industrialization of Ni-MH batteries. Shanghai Zhengcheng invested in nanocrystalline magnetic powder, and Jiangxi Hongyuan created a rare earth thermal stabilizer, extending the industrial chain into application fields. These developments signal a positive shift toward sustainable and high-tech rare earth utilization.