Special Issue: Baotou expansion plans; RE on China's industrial restructuring plan; China hunts foreign rare earth spies; China's RE and magnet foreign trade numbers 2023
Rare Earth 25 January 2024 #138
Our relationship with China is based on trust and understanding.
They don’t trust us and we don’t understand them.
Horst H. Damm (1991)
Spring Festival
China’s Spring Festival is looming from 11 - 16 February 2024. The wind-down is already slowly beginning, as many millions of Chinese head to their hometowns for this all-important family event.
With the Spring Festival the Year of the Dragon begins. Check your local fortune teller, what the dragon year means for you.
We’ll also pack our bags and venture across the Pacific to the bitter cold of North America. So this is our last post ahead of the Spring Festival.
Happy Dragon!
From the 2024 Baotou Municipal Government Work Report
Baotou is the capital of China’s Inner Mongolia Province. It is adjacent to the Bayan (Baiyun) Obo iron ore mine, which happens to be also the world’s largest resource of rare earth ores, as well as a niobium resource. Baotou is the largest rare earth industrial base on the planet.
We spare you the allegiance pledges of being true to “General Secretary Xi Jinping’s important instructions” , the “inspiration, excitement and motivation” resulting from Xi Jinping’s visit to Baotou and Socialist prose about “resolutely shouldering the glorious mission” - although it might be entertaining.
Baotou’s report goes about the “2 rare earth bases” policy, i.e. China Northern Rare Earth Group and China Rare Earth Group and claim “newly proven rare earth resource reserves far exceeding the current one”. They say they discovered the strategic key metal niobium in the Baotou Mine [50 year-old news?] and heavy rare earth in the Bayan Obo Yttrium-Barium Mine.
The 2023 output value of the all Baotou industry is supposed to have reached 80 billion yuan (US$11.2 billion, 3.3% of Inner Mongolia’s GDP).
22 projects including new magnet factories of JL Mag and Tianhe were put into operation. 118 new industrial enterprises were founded, in addition to 34 service companies and 248 trading companies.
Buried somewhere in the excessively long socialist prose is:
“The strategic reorganization and professional integration of municipal state-owned enterprises were fully completed, operating income increased by 27.5%, and profitable enterprises achieved profits of 158 million yuan.” (US$22.3 mio).
This is not so good, as it implies that by and large state-owned enterprises in Baotou operated at a loss. Among the SOE in Baotou are:
Baotou Steel Group (owner of Bayan Obo mine),
Baotou Tomorrow Technology Co., Ltd. (RE miner),
Baotou Rare Earth Group Co., Ltd. (raw materials for China Northern)
China Northern Rare Earth Group High-Tech Co., Ltd.
Here is, what what the Baotou government plans to achieve in 2024:
Overall local industrial output value to increase to RMB100 billion
Rare earth output value to reach RMB40 billion (US$5.6 billion)
Increase rare earth raw material output of Bayan Obo mine, using hydrogen-hybrid dump trucks (100t - ultimately 500 trucks) and the first fully domestic-made 300 t dump trucks
Open an additional 15,000 t/y NdFeB scrap recycling capacity (incl. Jinmeng, 2000 t/y)
Additional 110,000 t of rare earth processing capacity to go online in 2024 (China Northern)
Start of construction of 15,000 t rare earth permanent magnet capacity (Antai Technology Phase II, Yunsheng Technology, Ketian Magnets)
Overall permanent magnet output in Baotou to reach 180,000 t/y
Additional capacity for 7,000 tons of hydrogen storage materials (metal hydrides incl. La, Ce and Pr)
Add 80,000 t capacity for rare earth alloys
Add 40,000 t rare earth polishing powder capacity (incl. 3,000 t Zhongke Minghang)
Add 20,000 t rare earth catalyst production (incl. 6,000 ton Tianshi)
Encourage investment decisions for 30 permanent magnet motor companies (incl. Wolong)
Expand the trader base at the Baotou Rare Earth Exchange to 850 and increase the exchange transaction value to RMB20 billion (US$2.8 billion)
Successfully organise the Rare Earth Industry Forum and the 2024 Annual Meeting of the Global Rare Earth Industry Association (wasn’t that planned for Tokyo, Japan?).
These are only the excerpts about rare earth, there is much more. For example large build-up of silicon wavers, photovaltics and fluorine chemical capacities.
Of course overpromising is part of the political game in China, so take it with a pinch of salt, a pinch preferably the size of a brick. But even if only a fraction of the announcements come to fruition, it would be plainly massive.
It appears, that in Baotou they still believe, that the West can walk the talk on “carbon-neutral” and that Baotou would produce for a rapidly growing market.
From our perspective we don’t see that the market will be receptive to the capacity increases.
And what is going on in the West?
Debating clubs with endless sustainability and responsible-mining discussions, pouring large amounts of tax-payer money on many still-born projects and sizeable hand-outs of hard-earned tax-payer money to many snake-oil salesmen.
Time to get something done, folks!
National Development & Reform Commission (a.k.a. State Planning Commission)
Guidance Catalog for Industrial Structural Adjustment (2024 Edition)
In terms of rare earths the catalogue encourages provincial governments to support:
Rare earth permanent magnet and rare earth magnet materials projects for wind turbines
Rare earth and other large-sized high-purity sputtering targets, ultra-high-purity rare metals and sputtering targets for information technology
Rare earth metal materials and alloys in transportation
Ionic rare earth raw ore green and efficient leaching and extraction integrated technology, mineral resource conservation and comprehensive resource utilisation
Rare earth mining, smelting and separation projects (in line with rare earth mining rules & regulations, except for rare earth enterprise group projects that require total smelting separation control indicators [= rare earth quota])
It asks local governments to rigorously prevent the following:
Ionic rare earth ore heap leaching and pool leaching process projects
Monazite single mineral development projects [forbidden anyway]
Rare earth chloride electrolysis metal preparation process projects
Wet production process of rare earth fluoride for electrolysis projects
Mixed resource rare earth mine development projects below 232,000 tons TREO
Bastnaesite rare earth mine development project below 5,000 tons REO/year
Ionic rare earth mine development projects under 500 t REO/year and a life of mine less than 20 years
Rare earth separation projects below 2,000 tons (REO)/year
Light rare earth metal smelting projects below 1,500 tons/year, the electrolytic cell current of less than 5000A, and the current efficiency less than 85%
A limitation of capacity per project we have seen before in China’s steel industry. It was a mistake, as every steel maker made sure his capacity would be above the capacity-threshold, which eventually resulted in colossal oversupply of steel and the subsequent meltdown of the China steel market from 2014.
It also led to effective control of half of China’s steel market by a bunch of gangsters from a small town in Fujian Province, who helped desperate steel makers to dump their products on the market. The scheme was not to make money from steel, but to obtain large loans from China’s policy banks, which the gangsters had no intention at all to ever return. By the time the Chinese government woke up to the scheme, spectacular amounts of money had simply vanished.
China’s General Hostility Department
In New Comic, China Signals ‘Foreign Threat’ to its Rare Earths
China’s chief intelligence agency published a comic strip on Sunday that appeared to warn of a “threat” to its rare earth reserves from “overseas organisations”.
The comic, published on Sunday on the Ministry of State Security’s (MSS) official WeChat account, featured foreign-looking characters secretly extracting rare earths in the fictional Xishan Mining Area — described as an area rich in critical and scarce mineral deposits that could bring breakthroughs in super-semiconductor technology.
The story depicted two security officers that were sent to the area undercover as lost hikers to gather information. It showed the two officers uncovering “suspicious” exploration and mapping activities by a group of people supposedly doing survey work for real estate development.
Essentially this comic is about a fictitious “super nano-crystalline permanent magnet material” being “key material for the development of gravity cannons and breakthroughs in existing superconducting technology”, which foreigners want to steal clandestinely from some countryside mine.
China has very abundant reserves of such minerals, and overseas organisations have long been eyeing them.
Strategic resources are related to our national security. Nano-crystalline permanent magnet materials must be protected and must not fall into the hands of foreign organisations.
Science fiction
Any foreigner who has recently lived in China knows, that the whole scenario depicted here is entirely science fiction. There is no way to go un-noticed, unsupervised and unwatched in today’s China, anywhere, anytime, ever.
State-sponsored paranoia
Do you think you are not important enough to warrant so much attention? There is nothing too banal and too trivial for not raising national security concerns in Xi Jin Ping’s China. Even weather data are of concern.
Xenophobia
We hear from China that foreigners are told by complete strangers to “go home”, that taxi drivers refuse to take foreigners, denial of service in restaurants and other little daily nastinesses to make sure that foreigners feel as unwelcome as possible.
Contradiction
Chinese premier Li Qiang just spoke at the World Economic Forum in Davos, Switzerland, in the vain hope of encouraging foreigners to invest and come (back) to China to live.
If Li’s very own government stirs up mindless xenophobia along with ridiculous stereotypes, then he must not wonder why no Westerner wants to invest and live in China anymore, particularly not with a family.
Who really is in charge
Prime Minister Li actually can’t control the MSS and it’s excretions alone. The MSS and the Public Security Ministry are managed by the National Security Commission of the Chinese Communist Party, which, along with a myriad of other “small groups” and commissions, is chaired by Xi Jinping.
Rest assured, if there was one, Xi would also chair the National Fruits & Vegetables Commission of the CCP.
We digress
China’s current counterproductive historical-revisionist and revanchist policies, both flavours being often viewed negatively within socialist theory, pose the threat of a potential World War III.
While his predecessors chose to pay only lip-service to China’s numerous inherent territorial claims, from Russia and Mongolia via India, Bhutan and the South China Sea to Taiwan, the threat of World War III seems to be primarily due to Xi Jinping’s personal reluctance to accept the outcome of long foregone historical events.
Particularly the result of China’s civil war 1927-1949, a factually independent Taiwan, is unacceptable to Xi, similar to how Trump is unwilling to accept unfavourable election results.
And yet another blossom of xenophobic hysteria
Tesla cars face more entry bans in China as 'security concerns' accelerate
Tesla drivers in China are facing entry restrictions at more government-affiliated venues, including meeting halls and exhibition centers, due to data security concerns amid ongoing tensions between Washington and Beijing.
Sources told Nikkei Asia that a growing number of government affiliates, local authority agencies, highway operators and even cultural and exhibition centers have restricted Tesla cars from entering their premises since last year. Previously, such restrictions were generally limited to military bases.
One example is the Grand Halls in the heart of the North Bund district in Shanghai, a conference center operated by a state-backed enterprise that hosts cultural events, international exhibitions and banquets. Tesla cars are barred from entering the grounds of the Grand Halls, even if they are just passing through, due to national security risks, according to local residents.
It may not have occured to China’s policy enforcers that the Tesla cars on China’s roads are Made-in-China with Made-in-China components and thereby pose an infinitely higher implied national security threat to foreign countries than to China.
Should the West view the millions of electric vehicles China wishes to export as a national security threat, too? Time for a higher level of China de-risking?
Already Chinese-made mobile phones inexplicably keep sending data to China:
The Lithuanian National Cyber Security Centre (NCSC) recently published a security assessment of three recent-model Chinese-made smartphones—Huawei's P40 5G, Xiaomi's Mi 10T 5G, and OnePlus' 8T 5G. Sufficiently determined US shoppers can find the P40 5G on Amazon and the Mi 10T 5G on Walmart.com—but we will not be providing direct links to those phones, given the results of the NCSC's security audit.
The Xiaomi phone includes software modules specifically designed to leak data to Chinese authorities and to censor media related to topics the Chinese government considers sensitive. The Huawei phone replaces the standard Google Play application store with third-party substitutes the NCSC found to harbor sketchy, potentially malicious repackaging of common applications.
China keeps shooting itself into both feet, using an elephant rifle.
Kazakhstan can meet India's demands for rare-earths
Kazakhstan has 15 rare earth deposits, strategically important components of electronics and clean energy technology, and eyes for closer cooperation with international partners in harnessing the ample opportunities for these deposits, according to Chairman of the National Geological Service Yerlan Galiyev.
This can meet India’s growing demands for rare earth deposits from a source which is situated closer home. India has recently entered into a deal with Argentina for sourcing rare earth ..
Kazakhstan is good at raising expectations. For 15 years there have been a number on attempts on Kazakh rare earths, all of which fell flat.
The most recent to exit was the domestic rare earth producer Irtysh Rare Earths Co., Ltd. (IRESCO).
Laos to start fining mining companies amid complaints about projects
Companies will be fined up to 2 billion kip (US$97,000) for not complying with contracts, rules and laws on excavating and processing minerals, according to a decree issued by Prime Minister Sonexay Siphandone on Wednesday.
Companies that illegally trade and transport minerals will be fined up to one billion kip (US$48,480), the prime minister said. The penalties will take effect on April 1.
Over the last 20 years, the Lao government has given the green light to 1,143 mining projects and 1,336 mineral processing projects covering more than 72,370 square km (27,942 square miles) – more than 3 percent of the country’s total surface area.
Most of the recently approved projects were for Chinese investors, according to the Lao Ministry of Planning and Investment.
Some of the larger operations have prompted complaints that not enough local workers are hired, and that local residents are often left without farmland or drinkable water. [in-situ leaching of rare earths?]
Lao authorities conducted an inspection of all mining operations late last year and found that some companies began operations without doing proper feasibility studies or environmental impact assessments, according to the Ministry of Industry and Trade official.
Many companies intentionally reported a lower concentration of minerals to the government than the actual content because they wanted to pay less tax, he said.
Companies have been found to illegally release chemicals into waterways, have encroached on state land and have sent heavier than allowed trucks out on roads, an official of the Energy and Mines Department of Xaysomboun province, north of Vientiane, told RFA last week.
In Oudomxay province in northern Laos, officials in 2021 shut down seven mining projects and two mineral processing plants belonging to Chinese investors that didn’t comply with contracts and laws, according to a provincial Department of Energy and Mines official.
There are a number of Chinese rare earth mining operations in Laos.
China's rare earth exports hit 5-year high on demand from EV, high-tech sectors
The world's largest producer of rare earths shipped 52,307 metric tons of the minerals abroad last year, the highest since 2018, data from the General Administration of Customs showed.
Demand for rare earths picked up in line with the rapid development of new energy vehicles, wind power and inverter air conditioners, analysts said. The minerals are also used widely in lasers, military equipment and consumer electronics.
We disagree, that new energy vehicles, wind power and inverter aircons had anything to do with China’s rare earth materials exports merely recovering to pre-COVID levels.
As the avid reader of this blog will remember, more than half of the rare earths the West buys go into fossil fuel related applications.
China’s rare earth raw materials imports 2023
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