China Daily, News Report, Posted: Mar 13, 2012

BEIJING - The era of cheap rare earth supplies from China is doomed to end as the country tightens control over the precious resources out of environmental concerns, Chinese lawmakers said on the sidelines of the parliamentary session.

China has been supplying enormous quantities of rare earth products to the world. However, environmental costs were not included in the pricing of the commodities, said Liao Jinqiu, an economist at Jiangxi University of Finance and Economics.

"The exploitation of rare earths should be further integrated, and a rare earth industry chain must be forged so as to ease the environmental pressure created by excessive extraction," said Liao, also a deputy to the National People's Congress.

China is believed to have abundant reserves of rare earth metals, a group of 17 elements that are vital for manufacturing an array of high-tech products, including cell phones, wind turbines, electric car batteries and missiles.

China now produces more than 90 percent of the world's rare earth products, but its reserves only account for about one-third of the world's total.

The disorderly mining of rare earths has long been blamed for the environmental damage in rare earth-rich regions across the country. And experts say it will be costly to repair ecosystems that have been ruined as a result of rare earth mining.

Xunwu county in east China's Jiangxi province is a major production base for ionic rare earths.

Lavish exploitation of the metals since the 1970s has not only impeded local economic development, but also posed a threat to drinking water safety in neighboring Guangdong province, said Liao Liping, the county's deputy magistrate, another lawmaker attending the parliamentary session in Beijing.

"It would cost about 1 billion yuan ($158.7 million) to restore the ecosystems of those obsolete rare earth mines," said Liao Liping.

In order to control environmental damage and protect the resources, China has suspended the issuance of new licenses for rare earth prospecting and mining, imposed production caps and export quotas, and announced tougher environmental standards for rare earth production.

"What can be sure is that the environmental threshold for the mining of rare earths will be higher and higher in the future," said Lei Yuanjiang, another NPC deputy who is vice director of the Jiangxi Environmental Protection Department.

The shift of China's policy over rare earths will have a great impact on the prices of the metals, experts say.

Liao Jinqiu said China needs to regulate the exploitation of rare earths and unify its exports so as to secure a say in the pricing of the commodities.

"We must cut the exploitation of rare earths as we have to protect our environment, and the change in supply will definitely bring about a price fluctuation," Liao said.

"It is time to put an end to the era of cheap rare earths," he said.