The paper covers the history, geography and production capabilities of the China rare earth industry in considerable detail, noting that while China has 23% of the earth’s rare earth resources, it accounts for more than 90% of the world’s production of rare earth smelting separation products— i.e., 96,900 mt in 2011. This production is placing a burden on China’s resources that is difficult to maintain, and the paper offers China’s hopes that “countries and regions with abundant rare earth reserves will make active efforts in developing their own resources to diversify the supply and expand rare earth trade in the international market, shouldering together the responsi-bility of global rare earth supply in order to meet the needs of the sustainable develop-ment of the world economy.”

Rapid development of China’s rare earth industry has created problems within China. Among these: an accelerating decline in reserves; severe environmental damage; over-capacity in rare earth smelt-ing and separation; severe divergence between price and value over a consider-able period of time; and significant smug-gling of rare earths products out of China.

Regarding prices, the paper notes that prices for China’s rare earth products were flat to down from 1985 through 2005. Prices have increased in recent years, but the increases between 2000 and 2010 were less on a percentage basis than price increases for copper, gold, and iron ore during the same time period. These per-centage increases were: 254% for rare earths, 413% for copper, 439% for gold and 484% for iron ore.

Regarding smuggling, the paper states that smuggling of rare earth products to overseas markets continues to be a prob-lem despite efforts made by China’s cus-toms offices. During 2006, 2007 and 2008, the volumes of rare earth products imported from China, according to statis-tics collected by customs offices in the importing countries, were 35%, 59% and 36% higher, respectively, than export vol-umes reported by Chinese customs offices. The excess percentage dropped to 20% in 2011, but the problem is not fully solved.

Regarding national policy, the paper states that China gives simultaneous con-sideration to both domestic and interna-tional resources and markets and pursues a win-win strategy that both ensures a rea-sonable supply of rare earth products on the international market and helps protect its domestic environment and resources.

“China opposes politicizing the rare earth issue,” the paper states, “and is willing to strengthen dialogue and cooperation with other rare earth producers and consumers in a constructive and responsible manner, to work together with them to prevent excessive speculation in the rare earth market and to solve resource and environmental problems in the development of the industry.”

(The full text of China’s rare earth white paper can be downloaded at http://news.xinhuanet.com/english/business/201206/20/c_131665123.htm )