Fujian, the province with the country's third richest rare earth reserve, is building an integrated rare earth industrial park near one of the country's most productive heavy rare earth mineral deposits.

Located at south Changting, the 10 sq km park with an investment of 6 billion yuan (US$905 million) is expected to be ready by 2015, said Lin Donglu, secretary-general of the Chinese Society of Rare Earth.

In an exclusive interview with China Daily, he said that the new park will function as a regional rare earth processing and distributing port. At present, there are three processing companies and another two are under negotiation.

"The rare earth industry in Fujian may have a late start, but it means that the mineral had not suffered too much from over-exploitation, and it offers a chance to build a better industrial layout and an environmentally friendly industry," he said. His remarks came at a time when the central government is making efforts to reform the industry by stopping over-exploration and improper management.

China has been dominating the world's supply market for more than a decade, thereby depleting its own resources.

However, it is not the only country that has these deposits, said Chao Ning, section chief of foreign trade with the Ministry of Commerce at a conference in October.

He said that strategic, environmental and economic considerations mean that the country cannot afford to continue shouldering the burden of supplying the world.

Fujian's prospective reserve of rare earth is around four million tons, which accounts for 10 percent of the country's total, according to statistics released by Fujian authorities.

The reserve is mainly heavy rare earth, which is easy to exploit and has low radioactivity. It is widely used by the military, and in batteries, catalysts, and LED phosphors manufacturing. The reserve of heavy rare earth in Fujian, Jiangxi and Guangdong provinces is reported to take up 90 percent of the global total.

Lin believes the coastal province could also benefit from its location - with easy access to harbors.

"Sea transportation offers low cost. That's why inland countries such as Mongolia, though with a considerable amount of reserves, could not find a way to export," Lin said. He said Fujian's proximity to Taiwan, a global electronics manufacturing hub, is also an advantage. Taiwan produces 93 percent of the world's laptop computers. Modules such as LED and plasma panels require large amounts of rare earth. But lack of reserves has always worried the panel producers in Taiwan, thus many have moved their factories to Fujian in order to secure a better rare earth supply.

According to Lin, the northern and southern regions of China will not be in direct competition as their deposits have different compositions, and will likely cooperate, thereby helping China in global rare earth pricing discussions. Due to over-exploitation and improper management, rare earth prices from China rose by 20 percent to hit an average of $8,500 per ton in 2009, a 30-year record high. Prices started to pick up in the middle of 2009, with the government's efforts to reform the industry through a crackdown on illegal mining and reducing exports.

According to the Chinese Society of Rare Earth, global demand for rare earth will rise to 210,000 tons a year. China will retain its leading position in reserves, exploration, and export. Consumption is expected to see a significant increase. Experts are calling for protection, and rational use of China's rare earth reserves. "Irrational and scattered exploitation in China has left the industry nothing but price wars and huge environmental cost," Lin said. "The authorities in Fujian should learn lessons from previous cases, especially in environmental protection."

"Rare earth is just the very first step of our industrial chain," Liu Tonggao, chairman of Xiamen Tungsten Co Ltd, the developer of Longyan rare earth minerals, said in an earlier interview.

"We will conduct a rational, scientific, and green development of rare earth resources according to the development needs of the industry."

(China Daily November 19, 2010)