"We heard the new standards will be strict, which will force uncompetitive miners out of the industry," said Zhang Zhong, general manager of north China’s Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Co., Ltd., the country’s biggest rare earth producer.
Zhang said the new regulation will increase the cost of rare earth production and may raise the price of Chinese rare earth exports.
Yang Wanxi, a government advisor involved in the new regulation’s drafting, said the new standards are aimed to force producers to upgrade production techniques.
For example, experts said the permissible content of the pollutant ammonia nitrogen per liter of production waste water will be lowered to 15 mg from the current 25 mg, said Yang, a rare earth expert with the government of Baotou City.
He said the experts also suggested the government consider eliminating producers whose annual production capacity is less than 8,000 tonnes of mixed rare earth products.
Yang said that the draft regulation has been filed to the Ministry of Industry and Information. The ministry is still soliciting the industry opinions on the version.
Rare earth, a class of 17 chemical elements, has become increasingly important for the manufacture of high-tech products like flat-screen monitors, electric car, lithium ion batteries, wind turbines for wind power, missiles and aerospace alloys.
Mining rare earth damages the environment.
Chinese Premier Wen Jiabao said at the sixth China-EU Business Summit held in Brussels in October that China, which has a considerable percentage of the world’s rare earth reserves and products, seeks a sustainable way of exploiting the minerals.
He said proper control and regulations are important, and China will not close the market.
The Baotou Steel Rare-earth (Group) based in Baotou City has taken a dominant position in north China’s light rare earth market.
The company acquired equities in three rare earth separating and processing enterprises in Ganzhou City in eastern Jiangxi Province in August in a bid to expand into south China’s heavy rare earth market.
China stopped issuing new rare earth mining licenses in 2006 and has closed hundreds of small miners.
The government in September announced draft guidelines for the industry’s next five years of development, which encouraged merger and acquisition in the sector.
The guidelines aim to cut the number of rare earth firms from the current 90 to 20 by 2015.
Yang said the city of Baotou, which has the country’s biggest rare earth reserves, used to have 150 rare earth producers. Now the number has been reduced to 18.