China’s investment in rare-earth R&D

Science : China was late to join the race to develop novel rare-earth materials. “We lag behind the world in applications,” says Xu Guangxian of Peking University, a chemist who was detained by the Red Guard in the late 1960s before becoming a pioneer in separating rare earths from other minerals. But Western observers agree that China is catching up fast in areas such as fuel cells and magnetic refrigeration, thanks in part to research efforts now happening here at the Baotou Research Institute of Rare Earths (BRIRE). “Absolutely, they are gaining ground,” says Clint Cox, an analyst at The Anchor House, a rare earths consulting firm in Chicago, Illinois. Today, about three-quarters of the world’s neodymium magnets are made in China. Domestic industrial demand is rising: Last year, China consumed 60% of all processed rare earths.That unnerves some industry analysts and US legislators, who have expressed concern about China’s dominance of the rare-earth supply. Last year, China satisfied 95% of global demand--now about 125,000 tons per year—and holds more than half of all proven reserves. In the 1990s, China’s cheap production costs sent prices plummeting, driving many non-Chinese rare-earth mines out of business. Prices started creeping up in 2005, however, when China began to limit production and slap export tariffs on some rare earths. In a policy paper last month, China’s Ministry of Industry and Information Technology floated the idea of prohibiting export of three scarcer rare earths--europium, terbium, and dysprosium.If the Chinese government were to implement such a policy, that “would be a big problem for other countries,” says Judith Chegwidden, managing director of Roskill Information Services Ltd., a mining analysis company in London. China has a “natural monopoly” over heavier rare earths, she says, simply because few mines elsewhere have ample reserves.