China gets tougher on illegal mining, exporting of rare earths

China is stepping up efforts to restrict illegal mining and exporting of rare earths by setting up a system to certify the origin of supplies of the coveted materials, used in advanced electronics, defence and renewable energy.

According to vice minister of industry and information technology Xin Guobin, the new “tracing system" will use special rare earth invoices and other information like export data to crack down on illegal miners, state-owned China Radio International reported.

Analysts and other market players, such as Australia's Lynas Corp (ASX:LYC) — the only standing rare earths producer outside China — say the illicit activity is responsible for dragging prices down more than 10% last year as they continued to flood the market.

Beijing has been trying to block the illicit extraction and exports of rare earth for years. But smuggling, environmental devastation and dangerous artisanal mining practices remain rampant.

China has been cracking down on the illegal sector for years. But smuggling, environmental devastation and dangerous artisanal mining practices remain rampant.

Some estimates put exports from illegal mining through networks in Vietnam and Hong Kong as highs as 40,000 tonnes.

In 2014, the government decided to consolidate its rare earth industry under six large organizations. The move, aimed not only to control illegal mining and pollution, but also to modernize China’s mostly low-tech industry, is expected to be finished by July this year.

Beijing is also poised to impose a bunch of new environmental regulations including green export certificates and new taxes that are based on the value of the minerals, rather than on volume as is the case at present, Reuters reports.

Recent figures disclosed by the Association of China Rare Earth Industry, show that about 90% of the nation’s rare earth producers are currently operating at a loss, and many are expected to close up shop this year.

China gets tougher on illegal mining, exporting of rare earths

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