When will the chaos in rare earth mining be resolved? At the same time, strengthening market governance, eliminating local protectionism, establishing a specialized agency for domestic rare earth resource management, and standardizing the market industrial chain of rare earth resources will allow rare earth issues to be resolved domestically in advance.
Today's China is not the China of 30 years ago. China no longer needs to necessarily export rare earth resources to obtain foreign exchange to support domestic construction needs.
Due to the unique state-owned nature of rare earth resources, if they cannot be more effectively utilized at present, choosing to temporarily close mines may be a good option.
The Mountain Pass mine is the world's largest single bastnaesite ore deposit and is one of the most important sources of rare earth resources in the United States. However, in 2001, the United States chose to close this mine, which did not trigger a global rare earth resource war.
At the same time, cutting off the supply from the source of rare earth production naturally eliminates the need for the Chinese government to go through great lengths at customs to play WTO rule games with Western countries.
Therefore, improving the domestic utilization rate of rare earth resources and increasing the demand for rare earth resources within China would make rare earth production enterprises less willing to continue exporting.
If exports become a voluntary restriction for Chinese enterprises rather than government quotas, then it would not violate the so-called rules of the World Trade Organization (WTO).
However, China should focus its efforts inward on rare earth issues. The WTO is the final arbitration body for international trade disputes. Therefore, how to safeguard China's national interests according to principles favorable to our country will be a very important task in the near future.
Perhaps, in the not too distant future, Western countries like the United States might bring rare earth issues to the WTO. In response, China needs to make active preparations.
An EU trade commissioner, when discussing the WTO ruling on restricting raw material exports, deliberately mentioned the issue of rare earth exports. He stated: "China should ensure the free export and fair supply of rare earth resources." This is good advice, and it would be wise for the Chinese government to take heed.
Because during the entire litigation process of this raw material case, certain individuals in Western countries have been talking at length about so-called Chinese restrictions on rare earth exports.
It can be easily imagined that this lawsuit involving nine raw material exports is actually a rehearsal for Western countries to file complaints about rare earths to the WTO.
In 2011, China's Ministry of Commerce announced the first batch of rare earth export quotas for 2011, totaling 14,446 tons, a significant reduction of 11.4% compared to 16,304 tons from the same period last year, which caused dissatisfaction among Western countries.
The president of the German Automotive Industry Association once said that the difficulty in obtaining or the increase in price of rare earths would affect the competitiveness of German automotive enterprises. A spokesperson for Volkswagen Group once stated that they were closely monitoring the rare earth market and would try to replenish supplies from Australia or Vietnam if there was a shortage.
For this reason, the Chinese government has recently increased restrictions on rare earth exports, but this immediately provoked strong reactions from the Western world.
At the same time, the development and utilization of rare earths lack proper management, with serious over-exploitation by local governments and private enterprises.
Rare earth resources of such significant importance have performed poorly in the Chinese market. Rare earth prices have been kept too low, and there are no limits on export volumes. When other countries like the United States and France were closing their own rare earth mines, we were aggressively exporting.
If the future of the automotive industry lies in new energy vehicles, then the abundance of rare earth resources will determine which country can come out on top in the end.
For the automotive industry, rare earths determine the life and death of the future development of the new energy vehicle industry. The production of electric vehicles cannot do without rare earth resources. Hyundai-Kia Motors proposed early in 2011 to amend their articles of association, with an important clause being, "To find stable sources of rare earths to provide resources for the development of eco-friendly vehicles."
Rare earth resources are called the "industrial MSG" and are extremely important for the development of multiple high-tech fields such as new energy, new materials, environmental protection, aerospace, and electronic information. Xu Guangxian, known as the father of rare earths in China, once said, "Without rare earths, the U.S. could not have won the Gulf War against Iraq."
Rare earths for China are what oil is for the Middle East. Currently, more than 90% of the world's rare earths are produced by China, but the chaotic state of rare earth exports has caused China enormous losses and waste of this extremely important strategic resource.
Experts quoted in the New York Times have said that the legal difficulties Beijing faces may set a precedent, allowing Western countries to challenge China’s restrictions on the export of other natural resources, including rare earths.
Even so, China must remain vigilant regarding this WTO ruling because Western countries may use this successful precedent to exert even greater pressure on China regarding rare earth material exports.
Although this news is disheartening for China, fortunately, highly sensitive rare earth materials were not included in this WTO litigation.
On January 30th, China suffered another defeat in a WTO litigation. The WTO Appeals Panel ruled that China's practices regarding the export of nine industrial raw materials violated international trade rules.
According to statistics, in 2011, China's silver production was 1,244.6 tons, an increase of 7.14% year-on-year. China is the world's largest silver consumer and the third-largest silver producer. It is regrettable that China does not yet have a silver futures market. Market analysts believe that China urgently needs to launch silver futures to provide hedging services such as futures trading for related enterprises and also offer investors new investment tools and risk management tools.
In 2011, the most remarkable performance in global silver futures trading was in mini-contracts. India's MCX 1-kilogram and 5-kilogram silver futures contracts ranked first and second globally in terms of trading volume (contracts). On the contrary, large silver futures contracts performed averagely. Apart from the flagship 5000-ounce standard silver futures contract on the New York Mercantile Exchange (COMEX), other derivatives exchanges saw relatively low trading volumes in their silver futures contracts.
The United States is the earliest country in the world to conduct silver futures trading. The standard silver futures contract in the U.S. has a relatively large trading unit of 5000 ounces (approximately 155.52 kilograms), with physical delivery. Additionally, there are 1000-ounce ("mini") silver futures and 2500-ounce ("small") (MINY) silver futures, both of which are settled in cash.
According to the February 3rd report in the Futures Daily, global silver futures trading was very active in 2011, with a significant increase in trading volume. Mini and micro silver futures contracts particularly stood out. Statistics from Haitong Futures on the trading records of 19 silver futures contracts across 13 derivative exchanges worldwide showed that the total number of silver futures contracts traded globally in 2011 was nearly 144 million, an increase of 172.57% year-on-year; in terms of trading volume, the total silver futures traded globally in 2011 amounted to 4.15 billion kilograms, an increase of 56.47% year-on-year. In 2011, four new silver futures contracts were launched by four derivative exchanges globally.
In 2011, the total number of global silver futures contracts traded was nearly 144 million, an increase of 172.57% year-on-year; in terms of trading volume, the total silver futures traded globally in 2011 amounted to 4.15 billion kilograms, an increase of 56.47% year-on-year.