Rare Earth: Important Strategic Resources
Xi Jinping visited Jiangxi Jinli Permanent Magnet on May 20, 2019 to understand the development of the company and the development of the rare earth industry. It is then proposed that rare earth is an important strategic resource and a non-renewable resource. It is necessary to increase scientific and technological innovation efforts, continuously improve the technological level of development and utilization, extend the industrial chain, increase added value, strengthen project environmental protection, and achieve green development and sustainable development. . During the period when Sino-US trade relations and related policies were so tense, the leaders examined the rare earth industry and showed that the country attaches importance to rare earth resources.
In response to public opinion that the current Sino-US economic and trade frictions continue to escalate, rare earths as China’s strategic advantage resources may become an important bargaining chip for China’s counter-measures against the United States. The relevant person in charge of the National Development and Reform Commission recently said that as the world’s largest rare earth material. On the one hand, China adheres to the principle that the rare earth resources give priority to domestic needs; on the other hand, it is willing to meet the legitimate needs of the world for rare earth resources.
The relevant person in charge of the National Development and Reform Commission also stated that the industrial chains of China and the United States are highly integrated and highly complementary. The so-called two benefits and the fight are hurt, and the trade war has no winner. If anyone wants to take advantage of the products we manufacture from the export of rare earths and use them to curb the development of China, then I think the people of the Central Soviet Area and the Chinese people will be unhappy.
“There is oil in the Middle East and rare earth in China.” The strategic position of rare earths known as “industrial vitamins” is evident. On May 15, with the official announcement of restrictions on the import of rare earths, the rare earth industry immediately began a strong return. In the stock market, on the 21st, Hong Kong stocks in China’s rare earths soared 108%, and the A-share rare earths sector also rose by a large area, and the market value of the entire sector increased by 39.5 billion. This week, the rare earth permanent magnet plate also continued to strengthen.
China dominates rare earth mining and smelting – rare earth industrial structure
Rare earth and its industrial chain
Rare earth metals, also known as rare earth elements, refer to 15 lanthanides with an atomic number of 57 to 71 in the periodic table, and 17 elements of strontium (Sc) and yttrium (Y) which are similar in chemical properties to lanthanides.
Because of its unique physical and chemical properties, it is widely used in new energy, new materials, energy conservation and environmental protection, aerospace, electronic information and other fields, and is known as “industrial MSG” and “mother of new materials”.
According to the electronic layer structure and physicochemical properties of rare earth elements, and their symbiosis in minerals and different ionic radii, different characteristics can be produced. Seventeen rare earth elements are usually classified into light rare earth and medium heavy rare earth. In the natural world, rare earths exist in four forms: monazite, fluorocarbon strontium ore, xenotime, and weathering crust.
The rare earth industrial chain is divided into three parts: upstream mining, beneficiation, rare earth ore after mining, and rare earth concentrate; middle smelting and separation, hydrometallurgy to obtain rare earth oxides and rare earth metals, pyrometallurgy mainly to obtain rare earth alloys; downstream processing The rare earth downstream products include rare earth permanent magnet materials, hydrogen storage materials, fluorescent materials and rare earth catalysts.
Light rare earths are mainly open-pit mining, while medium-heavy rare earths are immersed in mining.
The exploitation of light rare earths in the north is mostly the first process in physical mode, that is, mining ore is first opened, and then crushed and separated. This type of mining has formed a huge tailings pond, which is a huge hidden danger and source of dust and radiation pollution.
The mining and utilization of medium-heavy rare earths in the south is mainly based on the in-situ leaching mining method, that is, the mine is directly immersed in an acid-base solution (such as ammonium sulfate), and the solution and rare earth separation components are recovered in the mountains. The leaching chemical agent will be It causes serious pollution to the soil and water environment around the mine.
The rare earth smelting methods mainly include hydrometallurgy and pyrometallurgy. The products obtained by hydrometallurgy have high purity and are widely used, but chemical reagents such as hydrochloric acid, sulfuric acid, caustic soda and heavy metal salts are used in the smelting process. These chemical reagents enter the wastewater to form harmful wastewater and seriously pollute water resources. The characteristics of pyrometallurgy are smelting at high temperatures. The problem is high energy consumption and narrow application of products.
China is the world’s largest rare earth resource, production, import and export country
According to the US Geological Survey, China’s rare earth reserves are abundant, accounting for 44 million tons, accounting for 36.7% of the world; Brazil’s rare earth reserves are second, with 22 million tons accounting for 18.3%; followed by India, Australia, and the United States.
98% of China’s total rare earth resources are distributed in Inner Mongolia, Jiangxi, Guangdong, Sichuan, Shandong and other regions, and have the distribution characteristics of “North Light South”. Light rare earths are mainly distributed in the Baiyun Obo mining area in Baotou, Inner Mongolia. The rare earth reserves account for more than 83% of the total rare earth reserves in the country. The ionic medium and heavy rare earths are mainly distributed in the southern regions such as Jiangxi and Fujian, accounting for about 10%.
According to the US Geological Survey, global rare earth (REO) production was 170,000 tons in 2018, and China’s rare earth (REO) production was 120,000 tons (not considering black rare earth), accounting for 70.58%. (REO is rare earth oxide equivalent)
Since 1998, China’s rare earth mine production accounted for more than 80% of global production for 20 consecutive years. Until 2015, due to the integration of China’s rare earth industry, the quota system was implemented, and the proportion of output declined slightly.
China’s rare earth import and export prices have long been depressed
China is the world’s largest exporter of rare earths. In 2018, rare earth exports reached 53,000 tons, a year-on-year increase of 3.58%.
However, the unit price of rare earth exports in China has been low for a long time. As an important strategic resource, China’s rare earth prices have seriously deviated from the value. At first, they did not understand how to use them to lead to the lack of pricing power, and then suffered the low price impact of black rare earths. Downturn. During the Twelfth Five-Year Plan period, legal rare earth prices run most of the time under cost.
According to the “Minutes of Minerals 2019” just released by the US Geological Survey, the net import dependence of rare earths in the United States is 100% in 2018, and the major importing countries and shares of rare earth compounds and metals are: 80% in China and 6% in Estonia. France and Japan each have 3%, the other 8%, and most of the rare earth compounds and metal raw materials imported from Estonia, France and Japan are from Chinese intermediate products.
On May 13, 2019, the Customs Tariff Commission of the State Council of China decided to increase the tariff rate on the US$60 billion list of US goods that have been subject to tariff increases since 0:00 on June 1, 2019. 25%, 20% or 10% are subject to tariffs. Among them, the list of tariffed goods with 25% tariffs includes a series of imported minerals such as rare earth metal ore imported from the United States.
China’s 2018 rare earth imports are mainly divided into mixed rare earth carbonate, rare earth metal ore, antimony ore and its concentrate. In 2018, China’s rare earth imports amounted to 41,400 tons (REO), of which rare earth metal ore imports totaled 28,918 tons (ore content, generally 40% grade), and the United States imported 27,568 tons (ore), accounting for China’s annual rare earth metal ore. The total import volume was 95.3%; the mixed rare earth carbonate imports totaled 30,298 tons (the amount of ore), of which Myanmar imported 25,829 tons (the amount of ore), accounting for 85.3%.
The increase in tariffs raises the cost of imported rare earth mines, affecting about 10% of China’s rare earth supply costs. On the one hand, it forms support for domestic rare earth prices, and on the other hand, it curbs US rare earth sales. At the same time, the upstream reduction and cost increase will be transmitted to the middle and lower reaches, which will support the export prices of rare earth smelting products in China.
China dominates rare earth mining and smelting, with obvious advantages
China is in a dominant position in the selection and smelting of rare earths. In 2018, global rare earth ore production was 170,000 tons, China’s output was 120,000 tons, accounting for 71%; global rare earth smelting and separation output was 146,000 tons, and China’s output was 115,000 tons, accounting for 78.8%.
As the largest supplier of rare earth smelting and separating products outside China, Lenner Australia’s LAMP separation plant produced 17,700 tons in 2018, only 15% of China; India and Kazakhstan’s output basically maintained the previous year’s level, only It is about 2,000 tons.
After nearly 50 years of development in China’s rare earth industry, the technology of development and utilization has been comprehensively improved. After the theory of rare earth cascade proposed by Professor Xu Guangxian of the Chinese Academy of Sciences, the level of rare earth separation technology and industrialization in China has ranked first in the world.
At present, it has developed from the mining, selection, smelting, processing and separation of rare earth minerals to the manufacture of rare earth equipment and the application of rare earth products. This shows that China has formed a complete rare earth industrial system.
The continuous expansion of production scale and the continuous increase of product types indicate that China has become a powerful country in the world of rare earths, and the rare earth industry will also develop rapidly in an all-round and high-end direction.
From 2011 to 2018, China’s rare earth patent applications increased by 250%. According to ThREE data, since 2011, China has applied for more rare earth patents than other countries in the world.
Rare earth industry patents: The number of patent applications in the rare earth industry in Japan is 94,482, accounting for 17% of the global applications, ranking first; the number of patent applications in the United States is 87,165, accounting for 16% of the global applications, ranking No. Second, the number of applications in China is 83,820, accounting for 15% of the global applications, ranking third. Among them, Japanese and American patents are mainly concentrated in the downstream processing of rare earths, and Chinese patents are concentrated in the mining and smelting process.
As can be seen from the patent application trend chart, in Japan, the United States and China, Japan exceeded the number of applications for 1,000 in the 1980s, and reached its peak in 1987, and has been relatively stable since then; In the 1990s, the number of applications in the United States exceeded 1,000 in the 1990s, and reached a peak in 2004, and has remained above 4,000. In 2000, China surpassed the number of applications for 1,000 in 2000, and then grew rapidly. In 2013, it broke through 10,000 pieces and there is still a rising trend.
Why are the reserves of other countries not low, and the production of rare earth mines is very small? It is mainly difficult for countries to exploit.
1. The technology is not up to standard and the labor cost is not competitive.
For example, the United States has a rare earth ore reserve of 1.4 million tons, but almost no rare earth ore is produced. The rare earth mine of the American Molybdenum Company, Mount Pas, began to supply rare earths in 1952. As the competitiveness of China’s rare earths became stronger, the profitability of the mines declined. In 2002, due to environmental problems, the company was exploited after a long-term shutdown. The technology is relatively backward, and it will not be gradually restored to production after the management of the resources and shares in 2018.
2. Environmental protection pressure is high.
From mining to smelting, every aspect of the rare earth will cause pollution to the environment, including destruction of vegetation, soil erosion, imbalance of ecosystems, etc., and may also precipitate wastewater, polluted water sources, polluted air from various gases, and even some effects are difficult to recover. . Japan, for example: The 16 million tons of rare earth mines discovered in Japan are located on the seabed. Except for technical requirements, the environmental problems caused by mining are even more serious.
There are rare earth resources in foreign countries. Even if they are mined, can they leave China? The answer is no.
At present, China’s smelting technology is in a monopoly position, with the most patents and an overwhelming advantage. The rare earth minerals mined from abroad cannot be used directly, and need to be processed and processed in China for further processing. Secondly, the construction of the rare earth treatment plant takes at least 2-3 years, and the technical patents are basically in the domestic market, and the cost cannot be compared with China.
Export control and steering industry integration – rare earth industry 10 years backtracking
China’s rare earth production accounts for almost 90% of the global total. However, for a long time, because China does not have rare earth production technology, some countries have imposed a blockade on China as a highly confidential technology. China can only be forced to sell “earth” for technology. For China, restricting the production and export of rare earths has become a necessary means.
In 2010, various rare earth resource listed companies broke the inherent pattern and led the new situation of China’s rare earth industry to compete and cooperate among several leading companies. The country has begun to significantly tighten the export quotas for rare earths. The government hopes to protect resources and the environment and achieve sustainable development through export control. On May 10, 2011, the State Council issued the “Several Opinions on Promoting the Healthy Development of the Rare Earth Industry”. Since then, China has launched a series of rectifications around the development of rare earth resources, smelting and separation, and circulation market order.
Due to the pollution of the environment, the high cost of treatment, and the low price of rare earths, the state began to impose restrictions on rare earths and quotas for rare earths. In 2005, the Chinese government cancelled the export tax rebate for rare earths and reduced the number of export quota enterprises.
In April 2006, the Ministry of Land and Resources of China stopped issuing rare earth mining licenses. From November 1 of the same year, the Chinese government also imposed export tariffs on commodities such as rare earths and ferrosilicon.
At the beginning of 2012, the United States, Europe and Japan complained to the World Trade Organization (WTO) that it sued China for export quotas for various forms of rare earths, tungsten and molybdenum (original minerals and primary processed products) and imposed export tariffs. Export licenses and export quota management and distribution measures. In the end, China lost the case. In response to the WTO ruling, China announced the cancellation of export quota management for rare earths on the last day of 2014.
Six major rare earth groups have improved control and industry concentration
In 2010, rare earth was established as a strategic scarce resource in China, and the total amount of rare earth was controlled in the form of storage. The behavior of purchasing and storing caused a sharp rise in the price of rare earths, and a large number of illegal smelting behaviors occurred, which caused great damage to the ecological environment and affected the collection of mineral resources taxes.
In 2011, the State Council issued the “Several Opinions of the State Council on Promoting the Sustainable and Healthy Development of the Rare Earth Industry” and began to integrate mining and smelting enterprises.
In 2013, the formation plan of the six major Rare Earth Groups was approved, and the integration of the rare earth industry is ready to go.
In 2014, the Ministry of Industry and Information Technology issued the “Guidelines for the Formation of Large Rare Earth Enterprise Groups”. Small and scattered domestic rare earth enterprises began to establish “5+1” North and South Six Rare Earth Groups through asset optimization, mergers and acquisitions. “1” refers to the rare earth in the north, and focuses on the integration of the rare earth industry in Gansu and Inner Mongolia. “5” refers to China Aluminum, Xiamen Tungsten, China Minmetals, Guangdong Rare Earth and Southern Rare Earth, focusing on integrating Jiangxi, Hunan, Fujian and Yunnan. , rare earth industries in Guangdong, Guangxi, Sichuan, Shandong, Jiangsu and other places.
In 2016, the “13th Five-Year Plan” was officially clarified. By the end of 2020, the six major rare earth groups have completed the integration of rare earth mining, smelting and separation, and comprehensive utilization of resources across the country, forming a scientific and standardized modern corporate governance structure.
Until 2017, the establishment of the six major rare earth groups was completed, and 22 rare earth mines and 54 smelting and separating enterprises were integrated. Only one rare earth mine and five smelting and separating enterprises were not integrated, and the concentration of rare earth industry was improved. The implementation of the policy has been strengthened, the industrial structure has been further optimized, the industry has been transformed and upgraded, and rare earth resources have been further protected and utilized.
Limit production by quota
After the completion of the establishment of the six major rare earth groups, the state integrated the rare earth excess capacity by means of production quotas, and further cracked down on illegal mining. In 2018, the rare earth mining and smelting indicators were allotted to the six major rare earth groups, and the state’s control over the rare earth industry Institutionalized, normalized stage.
China’s total rare earth production control plan for 2014-2017 will remain unchanged at 105,000 tons. In 2018, the rare earth production index will increase to 120,000 tons, of which light rare earth production index is 101,900 tons and medium and heavy rare earth production index is 19,000 tons. Among them, the Northern China Rare Earth Group has the largest quotas for mining and smelting, accounting for more than 50% of the total.
In March of this year, China announced the production quota for rare earth mines in the first half of 2019, which is significantly lower than last year’s higher level. According to the Ministry of Industry and Information Technology, the mining production quota for the first half of 2019 was 60,000 tons, down 18.4% from the same period of last year, while the smelting and separation ratio was 57,500 tons, down 17.9% year-on-year.
The government will dominate the industry trend, the rare earth industry has long been optimistic
Traditional varieties of trade disputes, market focus
As early as the trade war “traveling” in 2009, the United States and the European Union filed a trade dispute with China within the framework of the WTO, accusing the Chinese of bauxite, coke, fluorite, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus and Nine raw materials such as zinc are subject to export quotas, export tariffs, prices and quantity controls. Obama said that China restricts rare earth exports and creates unfair competition for high-tech manufacturing in the United States.
At present, there is still a large degree of uncertainty in the Sino-US trade war. As a strategic resource, rare earth is a necessary product for the manufacture of cutting-edge weapons. In addition, rare earth permanent magnets, which are required in high-tech products such as lasers, sonars, satellites, and radars, are also the main products of rare earths. China is the only country in the world that can supply all 17 rare earth metals, especially military heavy rare earths.
In the current situation of contradictions and objective existence, rare earths as a strategic resource have a high degree of market attention.
Myanmar customs closed, supply further contraction
In November 2018, due to the environmental disorder of domestic enterprises mining rare earths in Myanmar, and the production process involved ammonium sulfate pollution, in order to protect personnel safety and limit pollution, Yunnan Tengchong Customs announced that all resource products in Myanmar could not be imported into China. Closed the import of rare earth channels from Myanmar, while prohibiting the domestic use of ammonium sulfate for the export of rare earths to Myanmar.
On May 15th, 2019, Yunnan Tengchong Customs completely banned the import of rare earth mines from China into China. The retreat of this year, the domestic medium and heavy rare earth supply further contracted.
The ionic rare earth minerals imported from China are mainly from Myanmar and Vietnam; Myanmar accounts for about 30% of the monthly imports. China’s imports of rare earth carbonates in 2018 totaled 30,298 tons, of which Myanmar imported 25,829 tons, accounting for 85.3%.
Since the implementation of import measures by Tengchong Customs in November 2018, the imports of rare earth carbonates in Myanmar in November and December 2018 were 801 tons and 1,079 tons respectively, which was nearly 40% lower than the average monthly imports before the restrictions. In January 2019, Myanmar’s imports of mixed rare earth carbonates continued to shrink. The total amount of domestically imported mixed rare earth carbonates was about 1480.2 tons, down 58% year-on-year; among them, rare earth mines from Myanmar were only 963.31 tons, down 67% year-on-year.
Frequent anti-black action, strict environmental protection policies, long-term standardized development of the industry
Since 2017, the Ministry of Industry and Information Technology and the National Development and Reform Commission and other ministries have jointly decided to conduct on-the-spot inspections of the relevant provinces (districts) for the status quo of the rare earth industry, and the on-site supervision is expected to be normalized. In the follow-up, a number of environmental supervisions and special actions by local governments were carried out, and the environmental protection of the entire rare earth supply side became normal. In January 2019, the Ministry of Industry and Information Technology issued a comprehensive rectification of the rare earth industrial chain to strengthen the long-term standardized development of the industry.
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