China sets up rare earths industry association

A vast expanse of toxic waste fills the tailings dam, frequently whipped up by strong winds dumping millions of tonnes of radioactive materials toward surrounding villages, near Baotou city in Inner Mongolia, northwest China.

David Brancaccio: China is tending to its garden of earthly delights. Amid criticism from the U.S. and EU over its quotas for exporting rare earths, China's setting up a new association to streamline the industry. Rare earths are essential to most electronic gadgets and most of the world's supply is mined in China.

Joining us for some context is Michael Komesaroff, an Australia-based consultant on rare earths. Thanks for joining us.

Michael Komesaroff: My pleasure.

Brancaccio: Tell me -- why have the Chinese decided to create this new body now?

Komesaroff: For a number of years now, the Chinese have tried to consolidate the industry, and they've not had much success. And by forming an industry association, that's the first step in trying to bring the consolidation which they've tried for a number of years but failed.

Brancaccio: Now, the environmental angle here, we have to explain, is that mining rare earths can be a dirty business.

Komesaroff: The mining and the initial processing of them involves very dangerous chemicals which leave a lot of waste, and in China, these mines have been operating for many, many years and have built up waste heaps or tailings dams of very polluted contaminated waste.

Brancaccio: I have to ask you, though, is there really a shortage of this stuff?

Komesaroff: I don't believe there's a shortage. The Chinese have tried to impose restrictions, but the material gets out. I think there's an air of uncertainty that's causing people to worry, but like anything that's in short supply, the market will respond. China has over 90 percent of the market, but it has less than 40 percent of the reserve base. And others are now starting to develop their industries and bring them online.

Brancaccio: Michael Komesaroff is founder of the Australia-based consultancy Urandaline that works predominantly in this area of China rare earths. Michael, thank you.

Komesaroff: My pleasure.


Brancaccio: Also today, the activist group of computer hackers known as Anonymous pledged to launch further attempts to infiltrate Chinese government websites. The group says it's trying to uncover corruption and lobby for human rights. Last week, the group took credit for hacking some other Chinese government sites  defaced a few and swiped some passwords. A source with Anonymous told Reuters today the plan is to erode what's been dubbed "the Great Firewall of China," which blocks Twitter, Facebook, and YouTube in the name of maintaining social stability.

About the author

David Brancaccio is the host of Marketplace Morning Report. Follow David on Twitter @DavidBrancaccio

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