3Faces%20of%20the%20Dragon

had come to rely on China for their rare-earth supplies.
The embargo did not work well in the end for China. The stoppages triggered a harsh response
from other nations. Many began to look elsewhere for rare-earth elements and some, like the US and
its Molycorp Minerals LLC at Mountain Pass, California, continued with their plans to restart old
mines. The positive side is found in events such as the recent (8 August 2011) Third China Baotou
Rare-Earth Industry Forum, held on 8 August 2011. One point of discussion was whether China can
enhance further cooperation between itself and foreign companies that also specialize in rare-earth
elements. While China is projected to have 48% of the world’s rare-earth reserves, Baotou has 80
percent of China’s reserves. Meanwhile, China yearly continues to provide 90 percent of the earth’s
rare-earth metals. 894
In 2010, according to one US article, China produced 130,000 tons of rare-earth elements, while
the US produced zero tons. India was second with 2,700 tons, which demonstrates figuratively the
world’s reliance on China. According to the same article, China leads the world with 55 million tons
of rare-earth reserves, with Russia second at 19 million tons and the US third at 13 million tons. 895
Chinese Premier Wen Jiabao stated in October 2010, shortly after the trawler incident, that the nation
will not use rare-earth resources as a bargaining chip, even though most nations had by that time
already made up their minds that China had done so. The China Daily Online attempted to explain
China’s rationale regarding this issue. It noted that rare-earth elements must be cut and prices raised
due to environmental problems that stem from producing 90 percent of the world’s needs and from the
proliferation of small rare-earth companies in China that have allowed the business to sell rare-earth
at very low prices at the expense of added pollution. These two elements, over-exploitation and poor
mining habits, have caused China to reduce the number of companies and set state prices and quotas.
The nation is also implementing restrictions in accordance with laws and regulations. Meanwhile,
other large industrialized nations such as the US are not mining any rare-earth elements and are
thereby saving their reserves for a rainy day. 896 Further, rare-earth elements are used for military
purposes and this is another reason for implementing restrictions on their export. This is a legitimate
security concern of China. Chinese authors such as Jin Gaisong, Vice Director of the International
Trade Department of the Chinese Academy of International Trade and Economic Cooperation, state
that this tactic (limiting sales from Western countries to China for security concerns) has been used
against them repeatedly. 897
According to a report in 2011, the Chinese government is setting rare-earth-element quotas based
on rare-earth output, market demand, and the need for sustainable development. This system is
needed. Between 1996 and 2005 rare-earth exports increased ten times and the price dropped 36
percent. In 2009 China had only 36 percent of the world’s rare-earth reserves, as compared to 43
percent in 1996. Today China is closing hundreds of smaller mines (the Ganzhou production base in
Jiangxi Province once had 1,035 licensed mines) and imposing a 15-20 percent tariff on rare-earth
exports. 898 Prices are skyrocketing. An average ton of rare-earth exports cost $36,297 in January
2011, but by March the price was $68,305. 899 Japan has had to increase the price of its domestically
produced rare-earth magnets, one of its main products, since the prices of neodymium and
dysprosium, the key raw materials in the magnets, have risen sharply over the past few months.