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Committee on International Trade (INTA):

China’s monopoly on rare earth elements (REEs): how should Europe help to guarantee sustainable supply of REEs, whilst ensuring the viability of reserves and reducing the environmental impact of their mining worldwide?

Committee Article

Rare earths are a group of 17 chemical elements, which are essential for hundreds of high-tech, green-tech, medical, aerospace and defence applications, but whose low concentration levels in the earth’s crust make their extraction and economic exploitation difficult. Around 5% of the world’s GDP, are today dependent on rare-earth metals, with global demand expected to grow in the coming years.

At present, China holds a virtual monopoly in possessing the largest reserves of rare-earth elements in the world, at 36%, and controlling approximately 97% of the world market. China is using its monopoly as a tool to leverage power in the field of international politics. It has restricted exports of rare earths on the grounds of increased domestic needs and the need to improve the environmental sustainability of its own rare-earths production. Export quotas in the first half of 2011 were 35% lower compared with last year and China has announced the extension of export quotas to include also iron alloys containing more than 10 per cent of rare earths by weight. Consequently, prices have skyrocketed and in some cases have increased by 1000% since last year. Meanwhile foreign companies have moved their high-tech factories and research centres to China to circumvent quotas. In this context the EU needs to act, it will be up to INTA to decide how.

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