China's Ministry of Industry and Information Technology (MIIT) has announced that it will create a reserve for rare earth metals next year. The announcement of the intention of its department of raw materials director, Chen Yanhai, only wriggled its way out of an obscure conference by reports in the People's Daily. This comes on the back of a report released in August by the ministry called the 'Rare Earths Industry Development Plan 2009-2015', which called for greater controls over their sale and development.

These rare earths are defined as 17 metals that are considered critical in the development of low-carbon technology from wind-turbines to hybrid car batteries and much else in between and so any debate that followed MIIT's published plan might be expected to be animated.

By 2014, according to Stephen R. Dowling, an Australian expert on mining, demand for rare earth elements will hit 200,000 metric tons, up from just 40,000 in 2004. “The reason is that the particular properties of luminescence, magnetism and conductivity of rare earths have been increasingly harnessed by scientists to create a vast gamut of technologies from fiber-optic cables to advanced X-ray machines; flat television screens to the movable fins on guided missiles; and filters for viruses to navigation systems,” Dowling wrote on his website.
“They are an integral part of the technologies that politicians are relying on to try to avert the worst effects of global warming. From the generators of wind turbines to catalytic converters, and the batteries on hybrid cars to alloys that dramatically reduce leakage from overhead power cables, rare earths are at the heart of the green revolution.”

With the exception of Japan, virtually nothing was said in Europe or the US about the Chinese decision. In August as the debate increased over these resources (primarily with a sudden strangling sound of panic from Japan's biggest companies), the state press was pointing out that foreigners were buying stockpiles of materials because the price was low and China had to protect its natural resources. A month later excuse number two came from director Chen's deputy, Wang Caifeng, who said that the supply reduction was necessary to reduce environmental damage from mining.

Prices may well have fallen during the worst global recession since the Great Depression of the 1930s, but it is hardly some conspiracy on behalf of foreign buyers. For a start China currently accounts for 97 percent of global production in these 17 metals. It also accounts for about 60 percent of consumption. Both these facts would have a serious bearing on any metals price. China has been reducing the availability of these materials for export, at least 40 percent over the past 10 years, so it is hardly any wonder companies would jump on any price anomaly.

As for the environmental argument, had the government much concern it could start by halting the regiments of Chinese coal miners that die in almost weekly accidents, the latest in November in northeastern China in which 108 miners were killed. But worse than that, the reason China is now is such a dominant position is that nearly all miners in this sector outside China (in places like Canada, Australia, South Africa and the US) closed their operations soon after 2000 when China flooded the rare earth market with inexpensive metal gained using polluting but cheap mining methods.