Black Rare Earths Flow to Chinalco After Laundering

Tungsten and molybdenum are facing the new problems after the failure of WTO lawsuit. At present, the Ministry of Industry and Information Technology continued to complete tungsten/molybdenum management policy and promoted the establishment of rare metal regulation. For the current tungsten and molybdenum market, the actual dealing volume of tungsten product is weak, the market of molybdenum is the same to tungsten and rare earth. In brief, tungsten and molybdenum have missed the busy season. And rare earth industry in China is facing a big problem.

Recently, reporters learned from the Ministry of Industry, the Ministry of Industry and Information Technology has set up a special investigation team with other ministries, such as the Ministry of Environmental Protection, Ministry of Public Security, State Administration of Taxation, Business Administration and the Department of Homeland. The special investment team has carried on a special inspection to Hunan Province. The investigation indicates that the large number of trading companies is buying and selling rare earths with illegal ways and unknown sources, that is to say, these trading companies actually acted as "laundering agency" to promote the illegal circulation of "black rare earth".

These "black rare earth" flooded the market in great quantities, they flowed to some illegal smelting enterprises, and others, such as Chinalco, Minmetals. The reporters learned from the Ministry of Industry and Information Technology, the special investigation team has checked eight rare earth trading companies in Hunan Province, among which four companies have purchased illegal mineral products. The total of illegal mineral products reached to more than 4400 tons, which is worth more than RMB 730 million.

It is reported that the trading companies has laundered these illegal mineral products by using rare earth special VAT invoice, then sold them to the downstream smelting enterprises.

Special investigation team found that three trading companies (Hunan Hejin Trade & Development Co., Ltd., Hunan Hefeng Chemical Co., Ltd., Fuyi Trading co., Ltd.) have played an important role in the "rare earth laundering". These three trading companies have taken over the above four illegal companies, meanwhile they invoiced rare earth special VAT invoice and sold these illegal rare earth to Chinalco, Guangxi Nonferrous Rare Earth Company, Minmetals Jian Feng Liuzhou Tong Trade Co., Ltd., and other trading companies.

A member of the special investigation team said, from the perspective of the situation of Hunan,  there would be a lot of companies to help flowing illegal rare earth minerals from extraction to the final flowing to smelting enterprises, which has formed a complete "black rare earth" industrial chain, and this situation is very typical in China.

"In fact, the actual number of rare earth enterprises purchasing illegal "black rare earth" is far more than the official number", a person occupied in rare earth industry in Baotou spoke to reporter. in addition to the profit-driven, rare earth trade can increase local revenue, therefore local governments have taken acquiescence of attitude to some enterprises' illegal behavior, and that is also the important reason for the flooded "black rare earth". According to incomplete statistics, in the circulation of rare earth at present, there is more than a half of "black earth" in the market. Rare earth normal market order has been seriously damaged. Besides, compared with a price peak in the June, 2012, the price of rare earth has been declining by nearly 70 percent from last year till now. 

The reporter learned that, at present, seven illegal rare earth companies in Hunan have been investigated and punished by many departments, and have been confiscated illegal gains and the penalty ups to RMB 1.4 million. Among them, two illegal companies in Changsha involved in selling a huge amount of black rare earth, Changsha Municipal Industrial and Commercial Bureau transferred this case to Public Security Bureau, and the rest of five companies have to give the penalty of RMB100000 to RMB500000. The related cases will be investigated further, if they involve in the crime, it will be transferred to Public Security Bureau.

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