China corrals rare earth industry

Sept. 16, 2011 at 11:51 AM   |   Comments

BEIJING, Sept. 16 (UPI) -- The rising cost of rare minerals, supported by Chinese policies, is hurting green energy industries elsewhere, a U.S. chemical company executive said.

Several of the minerals, known as rare earth minerals, are critical components for energy-saving fluorescent light bulbs and wind turbines, The New York Times reported Friday.

China, which produces 95 percent of the world's rare earth minerals, is in a critical position. An effort to clean up the industry and consolidate it into four state-controlled businesses has already affected global supplies and could become a deal-breaker for future business decisions.

Currently, "The high cost of rare earths is having a significant chilling effect on wind turbine and electric motor production in spite of offsetting government subsidies for green tech products," Michael Silver, the chairman and chief executive officer of chemical company American Elements, said at a conference in Beijing.

Rare earth minerals have been mined and produced by several companies in China that do not have proper licensing. Rare earth mines are also notoriously linked to air and water pollution and radioactivity, as thorium, which is radioactive, is a constant in ore that contains rare minerals.

China is closing 31 rare earth companies this year and trying to consolidate most of the industry with three companies in Northern China and one in Southern China.

That could mean many companies will be forced to open facilities in China, in spite of the contention by the United States and the European Union that China, as a member of the World Trade Organization, cannot restrict the export of vital materials.

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