November 2, 2009 (Source:Metal-Pages) - China should use its reserves of foreign currency to buy rare earths for stockpiling in a bid to protect strategic resources, said a senior Chinese researcher on rare earths.
“I hope the Chinese government can invest about $ 1 billion to buy rare earths and thorium for stockpiling as China presently has sufficient reserves of foreign currencies and market prices for rare earths are comparatively low at this moment,” said Mr. Xu Guangxian, professor at Peking University in an interview with the China Economy Times.
“We must set up a stockpiling system for rare earths and thorium and support leading domestic producers like Baogang, Minmetals and Jiangxi Copper to implement the stockpiling,” Mr. Xu, also an academician at the Chinese Academy of Sciences said. He is regarded as the "Father of Rare Earths" in the industry in China.
China produces over 95% of the world's rare earth supply. However, there has been much criticism in China that the country's rare earths have been overproduced and undersold in the last decade.
“Japan and South Korea have built up stockpiles which are enough for 20 years of consumption by taking advantage of low market prices before 2008 when China began to restrict production but China hasn’t set up a stockpiling system yet,” Xu criticized.
“We must take action soon to protect rare earth reserves otherwise they could be exhausted in only ten years in some major producing regions,’ Xu warned. “There were around 1.5 million tonnes of industrial reserves of medium and heavy rare earths in southern China but now only 600,000 tonnes is there after years of overexploitation.”
Besides production restrictions and a stockpiling system, Mr. Xu also called for industry integration to prevent waste of resources.
“China has around 70-80 producers for rare earth separation but there is only one in Europe. Most of them are very small and harmful because they cause unfair trade by undercutting each other when market prices fluctuate. So we must support major producers like Baogang, Minmetals and Jiangxi Copper to lead the integration,” Xu said.
