Skip to main content

Advertisement

SpringerLink
Log in

China’s Rare Earth Supply Chain: Illegal Production, and Response to new Cerium Demand

  • Published:
JOM Aims and scope Submit manuscript

Abstract

As the demand for personal electronic devices, wind turbines, and electric vehicles increases, the world becomes more dependent on rare earth elements. Given the volatile, Chinese-concentrated supply chain, global attempts have been made to diversify supply of these materials. However, the overall effect of supply diversification on the entire supply chain, including increasing low-value rare earth demand, is not fully understood. This paper is the first attempt to shed some light on China’s supply chain from both demand and supply perspectives, taking into account different Chinese policies such as mining quotas, separation quotas, export quotas, and resource taxes. We constructed a simulation model using Powersim Studio that analyzes production (both legal and illegal), production costs, Chinese and rest-of-world demand, and market dynamics. We also simulated new demand of an automotive aluminum-cerium alloy in the US market starting from 2018. Results showed that market share of the illegal sector has grown since 2007–2015, ranging between 22% and 25% of China’s rare earth supply, translating into 59–65% illegal heavy rare earths and 14–16% illegal light rare earths. There will be a shortage in certain light and heavy rare earths given three production quota scenarios and constant demand growth rate from 2015 to 2030. The new simulated Ce demand would require supply beyond that produced in China. Finally, we illustrate revenue streams for different ore compositions in China in 2015.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4

Similar content being viewed by others

Notes

  1. While China eliminated its export quota in January, 2015 in line with a World Trade Organization ruling, production quotas are still in effect and drive legal production.16

References

  1. J. Hedrick, D. Cordier, and J. Gambogi, “Mineral Commodity Summaries—Rare Earths” (U. S. Geol. Surv., 1996–2015). http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/index.html#mcs. Accessed 01 January 2015.

  2. L. Li and X. Yang, China’s rare earth ore deposits and beneficiation techniques, European Rare Earth Resource Conference, Milos, Greece, unpublished research, 2014.

  3. Molycorp Inc., “Molycorp to move its mountain pass rare earth facility to ‘care and maintenance’ mode” (MCP News, 26 August 2015). http://www.molycorp.com/molycorp-to-move-its-mountain-pass-rare-earth-facility-to-care-and-maintenance-mode/. Accessed 15 October 2015.

  4. L. Chang and Y. Hui, Rare earth mining firms slip into the red (ChinaDaily, 15 August 2015). http://www.chinadaily.com.cn/business/2015-08/11/content_21558780.htm. Accessed 10 October 2015.

  5. Roskill Inf Services, Rare earths and yttrium: Market Outlook to 2020—15th ed. (Roskill Information Services, 2015). http://www.giiresearch.com/report/ros223949-rare-earths-yttrium-market-outlook-2015-14th.html. Accessed 10 November 2015.

  6. Special Unit on Commodities, Commodities at a glance: Special issue on rare earths—United Nations Conference on Trade and Development (United Nations Conference on Trade and Development, 2014). http://unctad.org/en/PublicationsLibrary/suc2014d1_en.pdf. Accessed 27 October 2015.

  7. U. S. Dep. of Energy, Critical Materials Strategy (U.S. Department of Energy Office of Policy and International Affairs, 2011). http://energy.gov/sites/prod/files/DOE_CMS2011_FINAL_Full.pdf. Accessed 01 January 2015.

  8. E. Alonso, A. Sherman, T. Wallington, M. Everson, F. Field, R. Roth, and R. Kirchain, Env. Sci Technol. (2012). doi:10.1021/es203518d.

    Google Scholar 

  9. B. Sprecher, I. Daigo, S. Murkami, R. Kleijn, M. Vos, and G. Cramer, Env. Sci Technol. (2015). doi:10.1021/acs.est.5b00206.

    Google Scholar 

  10. D. Guyonnet, M. Planchon, A. Rollat, V. Escalon, J. Tuduri, N. Charles, S. Vaxelaire, D. Dubois, and H. Fargier, J. Cleaner Prod. (2015). doi:10.1016/j.jclepro.2015.04.123.

    Google Scholar 

  11. X. Du and T. Graedel, Env. Sci Technol. (2011). doi:10.1021/es102836s.

    Google Scholar 

  12. X. Du and T. Graedel, Sci. Total Environ. (2013). doi:10.1016/j.scitotenv.2013.02.099.

    Google Scholar 

  13. Adamas Intelligence, Much ado about rare earth taxes: What you need to know about ongoing changes in China, unpublished research, 2015.

  14. X. Wang, Y. Lei, J. Ge, and S. Wu, Resour. Policy. (2015). doi:10.1016/j.resourpol.2014.11.002.

    Google Scholar 

  15. D. Abraham, “Rare Earth Magnates” (Chemistryworld, 24 February 2016). http://www.rsc.org/chemistryworld/2016/02/china-monopoly-rare-earth-metals-mining-david-abraham. Accessed 02 Mar 2016.

  16. Ministry of Commerce—People’s Republic of China, Regular Press Conference of Ministry of Commerce on January 21, 2015 (MOFCOM, 23 January 2015). http://english.mofcom.gov.cn/article/newsrelease/press/201501/20150100878729.shtml. Accessed 07 October 2015.

  17. K. Binnemans, P. Jones, K. Van Acker, B. Blanpain, B. Mishra, and D. Apelian, JOM (2013). doi:10.1007/s11837-013-0639-7.

    Google Scholar 

  18. Z. Sims, O. Rios, S. McCall, M. McGuire, R. Ott, and D. Weiss, Critical Materials Institute Annual Meeting, Idaho Falls, ID, unpublished research, 2015.

  19. Chinese Ministry of Land and Resources of the People’s Republic of China, Tungsten, antimony and rare earth mining quota, (2007–2015) http://www.mlr.gov.cn/zwgk/zytz/. Accessed 01 October 2015.

  20. L. Peiro and G. Mendez, JOM (2013). doi:10.1007/s11837-013-0719-8.

    Google Scholar 

  21. K.R. Long, B.S. Van Gosen, N.K. Foley, and D. Cordier, “The principal rare earth elements deposits of the United States—A summary of domestic deposits and a global perspective” (Sci. Invest. Rep. (U. S. Geol. Surv.) 2010–5220, 96 p., 2010) http://pubs.usgs.gov/sir/2010/5220/. Accessed 13 January 2015.

  22. D. Bleiwas and J. Gambogi, Preliminary estimates of the quantities of rare-earth elements contained in selected products and in imports of semimanufactured products to the United States (Sci. Invest. Rep. (U. S. Geol. Surv.) Open–File Report 2013–1072, 14 p., 2013) http://pubs.usgs.gov/of/2013/1072/. Accessed 13 January 2015.

  23. V. Papangelkis and G. Moldovanu, Recovery of rare earth elements from clay minerals, European Rare Earth Resource Conference, Milos, Greece, unpublished research, 2014.

  24. D. Schüler, M. Buchert, R. Liu, S. Dittrich, and C. Merz, Study on rare earths and their recycling (The Greens—European Free Alliance and Öko-Institut e.V., January 2014). http://www.oeko.de/oekodoc/1112/2011-003-en.pdf. Accessed 07 January 2015.

  25. P. Tse, China’s rare-earth industry (U. S. Geol. Surv.) Open–File Report 2011-1042, 11p., 2011) http://pubs.usgs.gov/of/2011/1042/. Accessed 10 September 2015.

  26. D. Kingsnorth, Curtin University—IMCOA, Rare earths quarterly bulletin #6, 2014.

  27. R. Lian and D. Stanway, China rare earth demand seen rising 50 percent by 2020 -industry body (Reuters, 16 September 2015). http://www.reuters.com/article/2015/09/17/china-rareearths-idU.S.L4N11N0PB20150917. Accessed 07 October 2015.

  28. Roskill Inf Services, Why is CBS investigating the rare earths industry right now? (PR Newswire, 24 March 2015). http://www.prnewswire.com/news-releases/roskill-why-is-cbs-investigating-the-rare-earths-industry-right-now-497319881.html. Accessed 15 November 2015.

  29. F. Pothen, Discussion Paper Number 14-005, Centre for European Economic Research/Leibniz Universität Hannover—Institute for Environmental Economics and World Trade, unpublished research, December 2013.

  30. Ministry of Finance—People’s Republic of China, “Notice of the Ministry of Finance and the State Administration of Taxation on Adjusting the Standards of Resource Tax on Rare Earth” (Public Information Services, 15 March 2011). http://tax.mofcom.gov.cn/tax/taxfront/en/article.jsp?c=30113&tn=1&id=a324d41f1ad54a5495ce403640f48adc. Accessed 06 October 2015.

  31. Ministry of Finance—People’s Republic of China, Circular on Implementing the Reform Concerning Levying Resource Tax on Ad Valorem Basis on Rare Earth, Tungsten and Molybdenum (Public Information Services, 30 April 2015). http://tax.mofcom.gov.cn/tax/taxfront/en/article.jsp?c=30113&tn=1&id=dcb77f056a1f49fb93d40ce927ebbbd2. Accessed 06 October 2015.

  32. J. Sterman, Business Dynamics: Systems Thinking and Modeling for A Complex World (New York, NY, USA: McGraw-Hill, 2000). p. 173.

  33. Z. Chen, Situation of China Rare Earth Industry and Policies (The Chinese Society of Rare Earths and Association of China Rare Earth Industry, Japan, 2015).

  34. R. Bromby, China still distorting the rare earth market (Investorintel, 09 April 2015). http://investorintel.com/technology-metals-intel/china-still-distorting-the-rare-earth-market/. Accessed 30 October 2015.

  35. E. Onstad, Cuts in China’s rare earth output not enough to revive hard-hit market (Reuters, 06 November 2015). http://www.reuters.com/article/rareearths-outlook-idUSL8N12U4A720151106. Accessed 30 December 2015.

  36. G. Hatch, Critical Rare Earths: Global Supply and Demand Projections and the Leading Contenders for New Sources of Supply (Technology Metals Research, LLC, 2011). http://www.criticalrareearthsreport.com/. Accessed 01 January 2015.

  37. D. Merriman, A Review of the Global Supply of Rare Earths (Roskill Consulting Group Ltd., 2013). http://www.rsc.org/images/David-Merriman_tcm18-230229.pdf. Accessed 27 August 2015.

  38. J. Hykawy, Why We Need to Think Beyond Illegal Rare Earths Mining (Investing News, 10 December 2015). http://investingnews.com/daily/resource-investing/critical-metals-investing/rare-earth-investing/jon-hykawy-stormcrow-capital-illegal-rare-earths-mining-china/. Accessed 30 December 2015.

  39. L. Hayes-Labruto, S.J.D. Schillebeeckx, M. Workman, and N. Shah, Energy Policy. (2013). doi:10.1016/j.enpol.2013.07.121.

    Google Scholar 

  40. L.L. Rokhlin, Magnesium Alloys Containing Rare Earth Metals, ed. J.N. Fridlyander and D.G. Eskin (London, England: Taylor & Francis, 2003). p. 17.

Download references

Acknowledgements

This work is supported by the Critical Materials Institute, an Energy Innovation Hub funded by the US Department of Energy, Office of Energy Efficiency and Renewable Energy, Advanced Manufacturing Office. We thank professor Rod Eggert and his students, Maxwell Brown and Braeton Smith, at the Colorado School of Mines in supporting us with data collection. We thank Bobby Jeffers and Calvin Shaneyfelt of Sandia National Laboratories for assisting with modeling techniques and economic mechanisms. © This manuscript has been authored by Battelle Energy Alliance, LLC under Contract No. DE-AC07-05ID14517 with the US Department of Energy. The United States Government retains and the publisher, by accepting the article for publication, acknowledges that the United States Government retains a nonexclusive, paid-up, irrevocable, world-wide license to publish or reproduce the published form of this manuscript, or allow others to do so, for United States Government purposes.

Author information

Authors and Affiliations

  1. Idaho National Laboratory, Idaho Falls, ID, USA

    Ruby Thuy Nguyen & D. Devin Imholte

Authors
  1. Ruby Thuy Nguyen
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. D. Devin Imholte
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to D. Devin Imholte.

Appendix

Appendix

See Figs. 5, 6 and Table I.

Fig. 5
figure 5

An example of stocks and flows using Powersim Studio

Full size image
Fig. 6
figure 6

Total Chinese illegal production (LREO and HREO) market share against total Chinese production (legal and illegal) of eight considered REOs

Full size image

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Nguyen, R.T., Imholte, D.D. China’s Rare Earth Supply Chain: Illegal Production, and Response to new Cerium Demand. JOM 68, 1948–1956 (2016). https://doi.org/10.1007/s11837-016-1894-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11837-016-1894-1

Keywords

Search

Navigation