China is one of the countries with the richest rare earth resources. Since the 1950s, China's rare earth industry has made remarkable progress. Over time, it has become the world’s largest producer, user, and exporter of rare earth materials. While the development of rare earths brings benefits to society, it also raises serious environmental and resource management challenges.
Academician Xu Guangxian, often called the "Father of Rare Earths," highlighted in an interview that China must address six major issues in its rare earth sector. These include improving resource reserves, integrating companies, resolving the Baotou tailings dam problem, and strengthening intellectual property protection. Additionally, recycling rare earth materials should be prioritized to ensure long-term sustainability.
One of the most pressing concerns is the Baotou rare earth tailings dam. As a non-renewable resource, rare earths require careful management. The current situation at the Baotou site is alarming: the main east mine is still being mined for iron ore, while only 10% of the rare earths are extracted, with 75% left in the tailings dam. This massive accumulation forms an artificial lake covering 15 square kilometers—larger than both Peking University and Tsinghua University. The dam’s walls are 35 meters high, growing by nearly 1 meter each year. Every year, about 10 million cubic meters of water and fine particles are released, posing a significant risk to the environment and even threatening the Yellow River. Immediate action is needed to stop the use of the dam, drain the water, cover it with soil, and restore vegetation. If properly managed, this site could become a valuable secondary source of rare earths, potentially increasing China’s global share from 20% to around 33%. The government should provide subsidies to Baotou Steel to support the reuse of these materials.
Establishing a national rare earth reserve system is another critical step. Countries like the U.S. and Japan have already begun stockpiling rare earths, securing their own resources. China, despite being a major supplier, now accounts for only 20% of global reserves, down from 46% in 1959. With annual global demand at 100,000 tons and China producing 150,000 tons, supply exceeds demand, leading to price drops. In 2006, production was limited to 80,000 tons, causing prices to triple. However, after the 2008 financial crisis, prices fell again because foreign countries had built up reserves over the years. This highlights the need for strategic stockpiling and better control over supply and pricing.
Promoting the integration of rare earth companies is essential. Currently, many small-scale and redundant firms operate in China, unlike in other countries where only one or two major plants exist. The government should consolidate the industry into two large companies—one in the north and one in the south—to improve efficiency and control. Although an industry association exists, coordination among members remains difficult. Only through large-scale operations can China gain more influence over pricing and market stability.
Recycling rare earth materials is also vital. As their use expands in products like energy-saving lamps, computers, and mobile phones, proper disposal and recovery systems must be established. The state should support the development of a comprehensive recycling infrastructure, including the recovery of waste from permanent magnets, batteries, and catalysts. This not only reduces environmental impact but also helps conserve finite resources.
Smuggling of rare earths remains a challenge. Despite efforts by customs authorities, illegal exports continue, with foreign statistics showing higher import volumes than official Chinese exports. For example, between 2006 and 2008, imports were 35%, 59%, and 36% higher than exports, respectively. In 2011, imports were 1.2 times higher than exports. Strict enforcement and improved monitoring are needed to curb this issue.
Intellectual property protection is equally important. In the 1980s and 1990s, research results were often shared freely with state-owned enterprises, leading to technology leakage. Private and local companies later gained access to advanced techniques, weakening China’s competitive edge. While China leads in rare earth separation technology, it must strengthen IP protection to encourage innovation and maintain a sustainable industrial ecosystem.
In conclusion, addressing these challenges is crucial for turning China’s rare earth resources into long-term economic advantages. By promoting integration, controlling extraction, and investing in recycling and R&D, China can ensure the sustainable and responsible use of its valuable rare earth resources.
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