V. Promoting Technological Advancement and Industrial Upgrading

China makes it a priority to enhance the level of scientific development and utilization of rareearth resources. The state strives to create a favorable policy environment for expediting thetechnological advancement and upgrading of the rare earth industry, overcoming resource andenvironmental bottlenecks and providing technological support for the sustainable developmentof rare earth industry.

The state encourages technological innovation in the rare earth industry. The Outline of theNational Program for Long- and Medium-term Scientific and Technological Development(2006-2020) lists rare earth technologies as a key field of research and development to getstate support. The state supports basic studies and studies on frontier technologies related torare earths, as well as the research and development, application and spread of criticalindustrial technologies, and promotes the establishment of an enterprise-centered, market-oriented technological innovation system that combines the efforts of enterprises, universitiesand research institutes. China actively develops environmental-friendly, advanced andappropriate rare earth exploitation technologies, highly efficient mining technologies suited tocomplex geological conditions, and comprehensive recovery technologies for paragenetic andassociated mineral resources, in order to raise the recovery rates and cyclical utilization levelsof the resources. The country makes vigorous efforts in organizing research and developmentof advanced technologies for low-carbon and low-salt discharge, manufacturing of ultra-pureproducts, membrane separation, recovery and utilization of associated thorium resources,recovery and treatment of fluorine and sulfur in tail gas, recycling of chemical raw materials,and automatic production control, to realize the efficient and clean smelting and separation ofrare earth metals. The government guides rare earth production and application enterprises,scientific research institutes and institutions of higher learning to develop deep processing andnew material application technologies. It works hard to foster science and technologypersonnel, strengthen the protection of intellectual property rights, and establish technologicalstandards, in order to create favorable conditions for the development of rare earthtechnologies.

Over the past few years, China has accelerated the technological transformation of rare earthenterprises, encouraged the use of efficient and green technologies for mining and oredressing, such as in-situ leaching, and advanced equipment to renovate rare earth mines,enhanced their performance in comprehensive resource utilization, ecological restoration,environmental protection and safe production. It has built and improved facilities for the storageand treatment of tailings to protect and make better use of tailing resources. The state alsoencourages the transformation of existing production lines of rare earth smelting andseparation by using advanced equipment and technologies, such as separation without usingammonia, and fuzzy simultaneous extraction technology, in order to reduce the consumption ofchemical materials and discharge of the "three wastes," namely, waste gas, waste water andwaste residues. New technologies and equipment featuring low discharge and low energyconsumption are adopted to renovate rare earth smelting enterprises, to increase productionefficiency, improve product quality and lower energy and material consumption. The state isalso accelerating the elimination of ammonia saponification extraction, chloride electrolysis,hydrometallurgical synthesis of rare earth fluoride, and other obsolete processes andcapacities. It encourages enterprises to combine technological transformation with merger andreorganization and elimination of outdated capacities, in order to get backward rare earthenterprises to close down, suspend operations, merge with others or change their lines ofproduction.

Readjusting and optimizing industrial structure is a crucial step in promoting the sustained andhealthy development of the rare earth industry. The Chinese government exercises strictcontrol over the total volume of rare earth smelting and separation, and will not approve anynew rare earth smelting and separation projects except for those state-sanctioned projects ofmerger and reorganization and for distribution optimum. Existing rare earth smelting andseparation projects are prohibited from expanding their scale of production. The stateresolutely halts the construction of projects that are undertaken in violation of relevantregulations, and will punish, in accordance with the law, departments and individualsresponsible for giving approval beyond their authority and those responsible for building theprojects in violation of relevant regulations. China adjusts the structure of processed rare earthproducts, curtails the excessive consumption of rare earth resources by low-end products, andreduces the output of low-grade processed products that require high rare earth consumption.It aims to follow the international scientific and technological and overall industrial developmenttrend and encourage the growth of high-tech rare earth application industries with high addedvalue. In addition, the state expedites the development of high-performance rare earthmaterials and devices, including magnetic, luminescent, hydrogen-storage, and catalyticmaterials, and encourages the application of rare earth materials in the fields of information,new energy, energy conservation, environmental protection and health care. The stateencourages enterprises to strengthen innovation in management, establish the modernenterprise system, and accelerate industrial upgrading, in order to transform them into modernenterprises that save resources, protect the environment, follow the path of intensivedevelopment and actively fulfill their social responsibilities.