China Daily reported this week that China will shut down about one-fifth of its rare earths production capacity under new industry rules. Analysts fear that the rules’ strict implementation could see production further erode.
In the name of protecting the environment and promoting industrial restructuring, China is enforcing a controversial rare earth “quota system.” Under the rule, the government keeps overall quotas for 2012 in line with the previous two years but segments them between companies based on their environmental compliance.
China has reportedly closed down illegal mines, cracked down smuggling, lowered the quotas for domestic production of rare earths and forced some processing plants to close for upgrades.
Jia Yinsong, director of the rare earths office at China’s Ministry of Industry and Information Technology said this week that up to one-third of the 23 mines and about half of the 99 smelting companies will fail to meet the new rules. He estimated that about 20 percent of the country’s rare earths capacity will be eliminated. The government will take measures to shut down unqualified companies and will offer compensation if necessary, according to Jia.
China insists that the new rules will not affect China’s exports because “most companies that won export quotas have met the [environmental] requirements.”
But the reality is that if this trend continues, fewer than 10,000 tons of rare earths will be legally exported from China this year, far less than the 31,130 tons that can be exported under a quota set by the Ministry of Commerce.
Expect global rare earths prices to continue to fluctuate wildly.
China produces more than 90 percent of the world’s rare earths – 17 elements crucial for uses that range from wind turbines and fluorescent lighting to iPhones and military radar systems. Beijing’s stringent export control over these essential elements has caused the European Union, the United States and Japan to cry foul. The World Trade Organization launched last month a special group to investigate the issue.
Can China save 3-D TV?
Well, if it hasn’t won hearts and minds in Peoria, there’s always China, right?
James Cameron, creator of “Avatar,” announced Wednesday that he is launching a joint venture in China with two Chinese state-backed companies to produce the advanced camera equipment needed for 3-D filming. The Avatar director’s company Cameron Pace Group also hinted at a possible collaboration with state broadcaster China Central television on developing 3-D TV.
Cameron reportedly said during the press conference: "This is an enormous untapped market that is right on the verge of the transition from 2D to 3D. This is the best place for us to create a kind of second home."
The China venture, based in Beijing, will provide technology and support, rather than co-producing films, according to the Cameron Pace Group.
3-D TV is not unfamiliar territory for the Chinese. Earlier this year, China launched its first three-dimensional television channel (3-D TV) on a trial basis. Chinese TV manufacturers and digital TV chip supplier such as Mediatek and Mstar have been highlighting the growing demand for 3-D TV in China.
Cameron declined to disclose either the value of the deal or the venture’s equity split with two state-owned entities -- film distributor Tianjin North Film Group and Tianjin Hi-tech Holding Group.
-Rare earth supply chain: Industry’s common cause
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