China begins new crackdown on rare earth sector
China will punish rare earth producers that fail to stick to a nationwide production quota after launching an inspection of the sector at the beginning of August, the country's industry ministry said on Monday.
In a notice posted on its website (www.miit.gov.cn), the Ministry of Industry and Information Technology (MIIT) said enterprises that exceed quotas or continue to employ environmentally destructive production techniques could have their quotas and licenses cancelled.
The ministry will also punish rare earth processors caught buying ore from mines that violate industry guidelines. Mines will also be forbidden from selling ore unless they have permission to produce.
The announcement follows a proposal made by the state-owned Minmetals Corp last week, urging all companies in the sector to suspend production in order to comply with government guidelines.
China imposed a production cap of 93,800 tonnes for 2011, and many processing plants have now been forced to close down because all quotas have already been used up, according to local media reports.
A spokesman for the industry ministry refused to confirm whether the output cap had already been reached when contacted by Reuters on Monday.
The new campaign, which will last until the end of the year, will aim to crack down on illegal production, which accounted for more than 40,000 tonnes last year, according to figures from the China Rare Earth Society.
China produces about 97 percent of global rare earth metals, which are used in a range of strategic industries such as new energy, hybrid cars and defence, and its efforts to clean up the sector have caused alarm in foreign markets.
Chinese officials have said the high production levels are environmentally unsustainable, but the country also seeks to increase its pricing power on the global market by eliminating small producers and building strategic stockpiles.