China forces rare earth control in Inner Mongolia

China has consolidated 35 rare earth metal producers into one state-owned firm, giving it a monopoly in the tense Inner Mongolia region.

The Ministry for Industry and Trade said that it will hand control to Baotou Steel Rare-Earth, which will become the only producer of the highly prized materials.

The ‘gold rush’ style clamour for the metals, used in technology ranging from touchscreens and TVs to weapons, has been well documented – with China maintaining a stranglehold over the world’s production.

China is none too shy about throwing its weight around by denying access to other countries, reducing its exports considerably in the past.

According to Dr Damian Tobin, an expert of Chinese business at the Centre for Finance and Management Studies, SOAS, the move will help “ensure the supply for China’s electronics manufacturers; and it will keep the sector off-limits to low cost or illegal, private and foreign investors.”

35 companies in the Inner Mongolia region will be forced to close down by the end of June for Baotou Steel Rare-Earth to take over mining and production.

Inner Mongolia has recently seen major protests by miners, herders and students over the way the area has been turned into a mining powerhouse.

Dr Tobin believes that it is “certainly true” that there has been a “general increase in public unrest over pollution and toxic waste from smelters” in the region, which is responsible for the majority of China’s rare earth production.

“Also from unofficial and illegal mining using low-tech/high polluting mining techniques,” he told TechEye.

“The costs of these problems are increasingly being reflected in high levels of respiratory disease and lung cancers as well as health care costs – unaffordable for the vast majority of workers, particularly since privatisation of health care benefits.

“This concern has reached official level as the costs of environmental damage are increasingly being monetised and enterprises are being hit with environmental levies,” Tobin explained.

“One suspects that it might also be part of a broader effort to increase the costs of entering these sectors, thereby bring order to what appears to have been quite a disorganised but highly strategic sector.”