The Chinese government started cracking down on the smuggling of the rare earth elements. In 2013, they lost an estimated 19,000 tons of rare-earth oxides, which were illegally mined and exported. The country’s legal production of rare-earth in 2013 was 80,400 metric tons.
It is estimated that china has about 30 percent of the world’s rare-earth reserves. They discovered them in the 1980s and have since seen a growing stable demand for rare earth metals, which are used in various technological devices. According to the report, situation of Rare Earth Industry Economy Operation in 2013; which was published by China’s Ministry of Industry and Information Technology (MIIT), China exported rare-earth that were about 12.6 billion USD last year alone. Because of the strict rules of China and controlling of the market of rare-earth, many illegal activities by the organized crime targeted mining and exporting of these rare elements. The wide use in electronics and motors industries caused the market to be thirst for it.
Smuggling harms the economy by depleting the resources and deflating the market price. Smuggling caused the Chinese government in 2013 to cancel 161 licenses of rare earth element and another 126 companies for smelting and separation were ordered to cease their activities and wait for correction and rectification. The government also has decreased the rare earth quotas to reach 15,110 tons in 2014 and identified 26 producers which can participate in mining and related industries to these quotas. This is not surprising, considering China lost 1.3 Billion dollars in 2013, because of the lowered prices mainly because of illegal activities.