Finally Some Rare Earth Regulations in China: XING, SHZ, MCP, TIE

How to be Fair to Everyone with Limited Resources

Now that the term ‘rare earth minerals’ has truly surfaced in the markets; investors know its significance.

The minerals are actually a group of 17 metals that are key in the production of cell phones, computers, and all things electronic; cars, television screens.

Three main problems have arisen with this group of elements: 1) they ‘are’ very rare, 2) China has approximately 90% of the world’s supply, and 3) they are not only difficult to mine, but are some of the most toxic elements that exit and pose a real threat to a number of environmental environments.

Two U.S. based miners, MolyCorp (NYSE:MCP) and Titanium Metals (NYSE:TIE), and two Chinese Miners, China Shen Zhou (AMEX:SHZ) and Qiao Xing (NASDAQ:XING), have long struggled with developing a more orderly, environmentally friendly, approach to extracting the elements from China’s good earth.

Until this week, regulation and access has been a hodge-podge of local and regional government policies.

Finally, the Chinese Ministry of Land and Resources has drawn up a plan to address the rare earth minerals on anational level that will bring consistency to the market and provide environmental protections.

The first step was to break everything into regions that are comprised of 11 rare-earth mining blocks covering 2,534 square meters (27,275 square feet) in Ganzhou, Jiangxi Province. It also includes 466.94 square meters of vanadium titano-magnetite mining areas in western Panzhihua in Sichuan Province.

Beginning last year, the Chinese government has accelerated the consolidation of the country’s rare-earth resources. According to the new plan, China will reduce the number of rare-earth refining companies to 20 from the current number of more than 100 by 2015.

The Ministry of Commerce weighed in with its own ideas and set quotas for 2011’s first batch of rare-earth exports at 14,446 metric tons, a 35% decline from the same period last year.

The lower figure will put a dent in some world supplies, but will ensure a longer life of mining for the elements and the quotas are viewed as being ‘good for business.’