China's first rare earth products exchange opened on Friday in the nation's Inner Mongolia autonomous region after a three-month pilot scheme.
The Baotou Rare Earth Products Exchange is expected to regulate the country's rare earth market, improve the way prices are formed and promote development of the industry, said Jia Yinsong, an official with the Ministry of Industry and Information Technology.
The exchange will introduce three spot transaction modes, namely price bidding, listed trading and real-time trading online, with more than 10 trading items including cerium oxide, praseodymium-neodymium oxide and europium oxide.
Located in Baotou, the exchange was initiated by Baotou Steel Rare Earth (Group) Hi-Tech Company, China's leading rare earth producer, and another 11 firms and institutions with registered capital of 120 million yuan (US$19.3 million). China is the world's largest rare earth producer and exporter, accounting for more than 90% of the world's supply. The country lacks pricing power in the global market, however, and wild swings in the price of resources has had a negative effect on Chinese producers.
The exchange will help integrate resources during their circulation in China and gradually regulate the trading and pricing of them, said Zhang Zhong, general manager of Baotou Steel Rare Earth Hi-Tech Company.
Rare earth metals are vital for manufacturing high-tech products ranging from smartphones and wind turbines to electric car batteries and missiles.
Zhang said the exchange will improve the transparency of the market and help China secure a bigger say in the pricing of rare earth products to stabilize the market.
Zhang Anwen, deputy secretary general of the Chinese Society of Rare Earths, said China has been the biggest rare earth supplier over the past 20 years with a huge cost to resources and the environment, but the prices of rare earth products have long been depressed.
"Chinese companies have suffered great losses and the whole rare earth industry has failed to develop healthily," he said.
Zhang Anwen said countries like the United States, Australia and Canada have rich rare earth resources, but are reluctant to exploit them because of the huge environmental costs.
"Even if foreign countries consuming Chinese rare earth products do not say 'Thank you,' they should at least acknowledge that China exports so much rare earth while struggling with the resulting pollution at home," he said.
Zhang Anwen made the remarks after the World Trade Organization ruled on Wednesday that China's export duty, export quotas, and export quota administration and allocation measures imposed on rare earths, tungsten and molybdenum products were inconsistent with WTO rules and China's Accession Protocol.
China has also implemented policies including output caps, stricter emissions standards and high resource taxes to curb environmental degradation and protect resources.
"What China is doing is to protect the environment to ensure coordinated development between human beings and resources as well as the environment," said Zhang Anwen, adding that foreign countries should respect China's stance and shoulder the shared responsibility to establish a diversified global rare earth supply system that would benefit everyone.