Prices, waste and trade rules
Published 13 October 2026
Price is how the market tells you what a shock cost. In 2010 and 2011 it told the story at volume. re019, Reuters, China rare earth prices explode as export volumes collapse re020, CNBC, Rare Earth Prices Surge
Reuters, working from Chinese customs data, reported on March 22, 2011 that China's exports of rare earth metals had burst through $100,000 a tonne for the first time in February, up almost ninefold from a year before, while the volume of trade stayed far below historical averages. Reuters said the squeeze had forced prices up dramatically since July 2010, when each tonne fetched $14,405 on average. The calculated rise averaged $10,000 a tonne a month, then accelerated in February to $34,000. The February average was $109,036 a tonne including cost of insurance and freight, almost half as much again as the January average. re019, Reuters, China rare earth prices explode as export volumes collapse
The New York Times, on May 4, 2011, put the price in kilograms. Neodymium fetched more than $283 a kilogram on the spot market, against about $42 a year earlier. Samarium, "crucial to the manufacture of missiles," was above $146 a kilogram, up from $18.50. World prices had doubled in four months, atop gains of as much as fourfold in 2010. The paper's explanation was one line of economics: "demand continues to outstrip efforts to expand supplies and break China's chokehold on the market." re020, CNBC, Rare Earth Prices Surge
The Chinese side of the picture arrived in the spring and summer of 2011. China Daily reported that Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech, "the world's largest rare earth producer," would consolidate 35 local rare earth miners by June and unify the distribution and processing of the metals, under a plan drafted by the regional government to concentrate all rare earth resources under it. The region, it said, was the world's largest producer and the site of 97 percent of China's reserves. Of the region's separation companies, 22 licensed by lower municipal governments would be shut down and compensated by Baotou, and nine unlicensed ones would be closed without compensation. The paper tied the move to a week-earlier announcement that Baotou would set up the country's first rare earth products exchange, trading spot products only, and described the goal as to "consolidate the nation's scattered rare-earth sector, gain more influence over pricing in the global market and pave the way for sustainable growth." The paper also noted that much larger reserves of light rare earths had been found in Inner Mongolia, while heavy rare earths were mostly scattered in South China and were more expensive, and that 15 southern cities with abundant heavy resources had signed enforcement agreements. re015, China Daily, Rare earth giant takes over 35 smaller miners
BBC News put the same decision in blunter terms on June 8, 2011: "China has restructured its rare earth industry in the region of Inner Mongolia, allowing only one company to continue to operate there," with 35 producers shut down, according to a statement from the Ministry of Industry and Information Technology. re016, BBC, China creates rare earth monopoly in Inner Mongolia
By the autumn the government was fighting a different problem. Reuters reported on October 18, 2011 that Baotou Steel Rare-Earth Hi-Tech said it would suspend its smelting and separation for one month from October 19 "in the circumstances of a continuing fall in prices, tepid demand and oversupply." The company had also decided the previous month to buy an unspecified volume of praseodymium-neodymium oxide at above-market prices. Reuters wrote that prices were in "a correction cycle from sky-high levels seen earlier this year after Beijing tightened controls over production and mining," that China had imposed a national output cap of 93,800 tonnes for 2011 and vowed to crack down on producers that exceeded their quotas, and that it had launched a four-month inspection campaign at the beginning of August to check quotas, pollution standards and consolidation targets. The two stories were joined by prices. The price spike of 2010 and early 2011 had begun to reverse by the end of 2011. re017, Reuters, China's Baotou Rare-Earth suspends facilities for one month re021, New York Times, Prices of Rare Earth Metals Declining Sharply re020, CNBC, Rare Earth Prices Surge
The fall continued. On November 16, 2011 the New York Times reported from Hong Kong that, after nearly three years of soaring prices with the cost of some elements rising nearly thirtyfold, "the market is rapidly coming back down." Prices for light rare earths like cerium and lanthanum had fallen as much as two-thirds since August. Neodymium had fallen about a third. Big companies in the United States, Europe and Japan had been "moving operations to China, drawing down inventories, switching to alternative materials or even curtailing production" to avoid paying the prices that prevailed outside China over the summer. The reported response to the 2010 price shock included moving operations into China. That is a rational response by a manufacturer. It is also how a dependency becomes harder to undo. re021, New York Times, Prices of Rare Earth Metals Declining Sharply
If the reported 2010 delays exposed dependence on one supplier, the question for everyone else was where a second source could be built. Lynas chose to process its ore in Malaysia, in an industrial park near Kuantan, and the history of that plant shows how hard a second source is to build. re010, New York Times, Japanese Firm in Rare Earths Deal With Australian Miner re008, Japan Times, No improvement in China's rare earths ban re022, BBC, Lynas learns fate for Malaysia rare earth refinery
Opposition to Lynas's Malaysian processing plant drew on an older local experience, the BBC reported. The BBC recalled that an earlier rare earths refinery near the northern city of Ipoh, jointly owned by the Japanese conglomerate Mitsubishi and other companies, was shut down in 1992 after local residents complained of health problems and birth defects that they believed were caused by radioactivity in the slag heaps. The company that owned the refinery spent years cleaning up the site and, the BBC wrote, denied responsibility. re022, BBC, Lynas learns fate for Malaysia rare earth refinery
On February 1, 2012 the ABC reported that Malaysia's Atomic Energy Licensing Board had granted the plant, being built in the eastern state of Pahang, a temporary operating licence for an initial two-year period, with "several conditions." The board said the licence could be suspended or revoked if the company failed to meet conditions on handling potentially hazardous waste, and that Lynas must submit plans for waste management within 10 months and, if necessary, return it to "the original source." The board had reviewed the application at a closed-door meeting on the Monday. The plant was already near completion and had originally been slated to start operations in the third quarter of 2011. Thousands of Malaysian opponents had held protests, mainly in Kuantan. Lynas insisted that the plant, which would handle rare earths imported from Australia, would be safe, while critics said radioactive waste could leak and threaten public health and the environment. re023, ABC, Malaysia approves Australian rare earths plant
When Beijing's quotas bit, the United States, the European Union and Japan took them to the WTO. The resulting case records how the WTO treated those export restrictions. re024, WTO, China - Rare Earths (DS431 dispute summary)
On July 23, 2012, according to the WTO's own case summary, a dispute settlement panel was established in the case concerning China's measures related to exports of rare earths, tungsten and molybdenum (DS431, DS432, DS433). The complainants were the United States, the European Union and Japan. The measures at issue, the summary says, were "export restrictions on a number of rare earths, tungsten, and molybdenum," and they "comprised export duties, export quotas, and certain limitations on the enterprises permitted to export the products." re024, WTO, China - Rare Earths (DS431 dispute summary)
BBC News described in October 2012 a saga that "began more than 10 years ago, when Lynas abandoned gold and set out to become one of the world's biggest producers of so-called rare earth elements." Lynas owned what the BBC called one of the richest sources of rare earths in its Mount Weld mine in Western Australia, but chose to process the ore in Malaysia after an earlier plan to build a refinery in China fell through, because of Australian government objections to the likelihood that China would impose restrictions on Lynas's products. It also had permission to build a refinery in Australia but rejected that option on the grounds of cost. The Malaysian government gave a green light to build in an industrial park near Kuantan as long ago as 2007 and offered Lynas, as a "pioneer investor," a 12-year tax holiday. The BBC wrote that "they both underestimated opposition to the plan." re022, BBC, Lynas learns fate for Malaysia rare earth refinery
By October 2012 the matter was in a Kuantan court. BBC News reported that the court had again delayed a decision on a petition from environmental activists and local residents to revoke the operating licence, which forced Lynas to postpone starting the smelting of ore, planned for later that month. The BBC added that if the plant started, it would be "the first significant source of rare earths to come on stream outside China for many years." The lesson of Kuantan is about time more than chemistry. The green light Malaysia gave in 2007 and the temporary operating licence it gave in 2012 were five years apart, and protests and a court petition came in between. Any plan to build processing capacity outside China inside a year or two should be read against that timeline. re022, BBC, Lynas learns fate for Malaysia rare earth refinery re023, ABC, Malaysia approves Australian rare earths plant
The panel's report was circulated on March 26, 2014. It found, as the summary records, that China's export duties on rare earths, tungsten and molybdenum were inconsistent with its Accession Protocol, and that China could not justify them under the general exceptions in Article XX of the GATT 1994. The reasoning leaned on an earlier ruling, China - Raw Materials: the panel said that none of China's arguments was a "cogent reason" for departing from the Appellate Body's finding there that the export duty obligation in paragraph 11.3 of the Accession Protocol is not subject to those exceptions. re024, WTO, China - Rare Earths (DS431 dispute summary)
The quotas got the same treatment. The panel found that the export quotas on rare earths, tungsten and molybdenum were inconsistent with GATT Article XI, which bars quantitative restrictions, and that they were not justified under Article XX(g), the exception for measures relating to the conservation of exhaustible natural resources. China did not appeal that overall finding. It appealed limited aspects of how the panel read the words "relating to" and "made effective in conjunction with" restrictions on domestic production or consumption. re024, WTO, China - Rare Earths (DS431 dispute summary)
The third finding concerned who was allowed to export. The panel found that China maintained restrictions on the trading rights of enterprises exporting rare earths and molybdenum, namely minimum registered capital, prior export experience and export performance, contrary to paragraphs 83 and 84 of China's Working Party Report. It said China was entitled to try to justify the breaches under Article XX(g), but had not made a prima facie case that the requirements were justified. re024, WTO, China - Rare Earths (DS431 dispute summary)
In its March 26, 2014 announcement the US Trade Representative said China's decision to promote its own industry had caused US manufacturers to pay as much as three times more than their Chinese competitors paid for the exact same rare earths. That was the US government's characterisation of the dispute, not an independent price series. re026, USTR, United States Wins Victory in Rare Earths Dispute with China: WTO Report Finds China's Export
The final step came on August 7, 2014, when, in the WTO's words, "the WTO Appellate Body issued its reports" in the case. The summary says the Appellate Body upheld the panel's finding that Article XX was not available to justify a breach of the export duty obligation, and held that the Marrakesh Agreement, the Multilateral Trade Agreements and China's Accession Protocol form "a single package of rights and obligations that must be read together," but that whether a particular provision links to an exception must be answered by a thorough analysis of the text. On the quotas, it agreed that a panel should focus on a measure's design and structure and not on its effects in the marketplace, although it is not precluded from considering market effects, and that the burden of conservation does not have to be evenly distributed between foreign consumers and domestic producers or consumers. re025, WTO, Appellate Body issues reports on rare earth disputes re024, WTO, China - Rare Earths (DS431 dispute summary)
The ruling concerned the quotas, duties and exporter-eligibility rules of 2010 to 2014, and those are what the WTO summary describes. The licensing system China introduced in April 2025, described in a later chapter, is a separate measure, and nothing in the 2014 summary addresses it. re025, WTO, Appellate Body issues reports on rare earth disputes re024, WTO, China - Rare Earths (DS431 dispute summary)