The B2B platform for full-electric and plug-in hybrid electric vehicles: Industry News

The Chinese “ban” on Rare Earth Elements (REE) is only meant to be an export control to support China’s economy and environment. The government will limit the export of these metals that are necessary for the EV and PHEV production if it concerns a semi-finished REE product.

Recent statements from China might have led to the conclusion that the hybrid and electric vehicle industry has to fear a supply crunch on rare earth elements that are essential for the production of batteries and electric motors. However, Chinese officials try to clarify their position and emphasise the fact that they will not ban the exports on these REEs but rather give the priority of its own resources to domestic uses.

The problem is that China mines 95% of the world’s rare minerals that are taken out of the earth. Giving its own resources to “its own people” implies that the complete production has to move to China. The Chinese official Wang Caifeng, deputy director-general of the materials department of the Ministry of Industry and Information Technology, stated that Beijing will encourage sales of finished rare earths products but will limit exports of semi-finished goods. “China wants to develop its industries to process rare earth elements and create products from them,” she adds. She mentioned the environment as one of the main reasons for the limitation. She explained that China has to limit the output to protect its environment, as the production of one ton of rare earths produces 2,000 tons of mine tailings.

Another official from the Chinese Government described to the Wall Street Journal the Chinese way of thinking regarding this issue: "We do not focus on short-term gains in rare-earth prices. We want rare-earth industries to locate in Inner Mongolia, and we're discussing with government departments to stabilise rare-earth prices.

The recent discussions clearly highlight to the world that these metals are strategic and it might be questionable whether all these clarifications from China can allay the fear of increasing metal prices or supply problems.

Background

The Chinese Ministry of Industry and Information Technology has issued a draft policy of reducing the mining and exports of rare-earth metals. In this draft, dating from end of August, it is written that the ministry aims to enact an annual export quota of 35,000 tons. In addition, a potential ban on at least five types of rare-earth elements is mentioned as well as a series of steps to control mining.

In 2008, the value of global REE was around $1.25 billion. By 2015, it is projected to grow to about $3 billion.