Can a Chinese trade group make rare earth minerals greener?

Rare earth metal image via Shutterstock.

[Editor's note: Consumer electronics, solar panels and many other products depend on rare earth minerals, which are pricey and can cause environmental damage to mine. This article discusses how the formation of a new Chinese trade association could make extraction greener, but will likely keep prices high. For additional coverage on how companies are responding to supply chain challenges related to rare earth materials and other minerals, see "HP, Intel and GE start fund to boost conflict-free minerals" and "Finding gold in waste."]

The Chinese government has formed a new rare earth trade association to help improve management of the strategically important sector and beef up environmental protection across the industry, according to state media reports.

News agency Xinhua reported on Sunday that the association would bring together 155 members, including industry giants such as Aluminum Corporation of China and China Minmetals Corporation.

Vice minister of industry and information technology Su Bo said the new group had been formed to "promote sustainable and sound development in the sector."

The group, which will be chaired by Gan Yong, an academic who also serves as president of the Chinese Society of Rare Earths, will also work on a new price mechanism for the industry and lead efforts to ease international trade disputes.

The launch of the new group follows the Chinese government's announcement last year that it would introduce tighter quotas for exports of rare earths and strengthen environmental rules governing the sector.

The association will also be tasked with managing escalating trade disputes with the U.S., E.U. and Japan, which recently resulted in a series of complaints being lodged with the World Trade Association (WTO) over China's decision to tighten export quotas.

Rare earths are critical to large numbers of IT and clean tech products, including solar panels, wind turbines, batteries and consumer electronics, and as such China's stance has angered many Western firms that have seen raw material costs rise as a result of supply restrictions.

But in a signal that the new trade association is unlikely to herald a shift in strategy, Gan stressed that China's rare earth industry has a responsibility to improve environmental protection.

He told Xinhua that other countries also had access to rare earth reserves they were not exploiting. "Many countries in the world have rare earth reserves -- you cannot rely on China alone to provide all the supplies," he said.

This article originally appeared on BusinessGreen.com and is reprinted with permission.

Rare earth metal image via Shutterstock.

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