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Though China is rich in rare earth metals, authorized exploration companies say they're scrambling to make a living. Yin Hang finds out why the ones following the rules are struggling.
The rare earth elements, or rare earth metals, are a collection of seventeen chemical elements in the periodic table. It's widely used in the high-tech and military industries.
China is rich in the precious metal, and over 95 percent of the rare earth in the world is exported from China. The government has spared no effort to protect the resource. And regulations proved to be effective in some provinces.
But some people are still covertly excavating. Local law enforcement officials say the cost for setting up an illegal rare earth mine is actually quite low.
Wu Jinghui, Land & Resource Bureau Official of Heyuan, Guangdong Province said "Illegal operators could set up a small mine at the cost of only two to three thousand yuan. And they can start making a profit after only six months of excavation."
The market was once rampant with illegal exploiters and traders. And the rare earth black market prices were squeezed to low levels.
Zhang Hongtao, Chief Engineer of Ministry of Land & Resources said "Lured by its high profits, exploiters were excavating secretively and randomly. But the excavated rare earth has ended up with a cheap price in the market, because too many exploiters were competing with each other for limited number of consumers."
Experts say some foreign rare earth consumers are partly to blame.
Traders from countries such as Japan, South Korea and the US snapped up large amounts of rare earth between 1995 and 2005 at a low price. They now hold sufficient rare earth reserves to last 20 years, enough to give them control over pricing on international markets.
Experts are now calling for a stronger combined responsibility, both domestically and internationally, to preserve the rare earth resources.
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