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Regulations loosened on foreign investment in rare earths in Hainan

Rare earth. Photo: VCG

China is easing regulations prohibiting foreign investment in the sectors of rare earths and radioactive minerals in South China’s Hainan Province starting from Monday, in move that highlights China’s continued opening-up policies.

By bringing foreign investment and technology in the sector of the critical resources, the move is expected to upgrade the production chain of the domestic sector in the long term and minimize environmental costs, experts said. But the openness in market access will unlikely change China’s overall policies for rare-earths exports, they added.

According to the negative list jointly released by the National Development and Reform Commission (NDRC) and the Ministry of Commerce earlier this year, easing of regulations in several areas, including rare earths as well as telecommunications and education, will mean more market access to the local manufacturing and mining industries.

“The goal of opening to foreign companies is to upgrade the downstream manufacturing process,” Liu Enqiao, a senior energy analyst at Beijing-based Anbound Consulting told the Global Times on Sunday.

China has been revising regulation of the sector. The Ministry of Industry and Information Technology released a draft rare-earth management rule, including quota management of domestic rare-earth production, investment management and supervision, which analysts said showed China aims standardize management of the industry and promote its high-quality development.

Another expert surnamed Chen told the Global Times that “companies will have to prove that they can bring added value and advanced technology that can significantly improve the production chain and reduce the environmental costs.”

However, analysts said that while foreign investors are allowed to participate in the production of rare earths, which are essential to manufacturing of high-tech components, it does not mean that China’s regulations on export will change.

“China has always had tight controls on the exports and mining of critical resources, and that will not change,” Liu said, adding that market openness will be more conditional and complicated than just allowing foreign companies to share the mining rights.

Chen also said that China’s tight regulations over rare earths are unlikely to ease in the next few years and any changes would probably start from the ore-processing industry instead of the mining rights.

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