The Ministry of Land and Resources said China is going to launch a pilot hoarding program for coal and rare earth.

Last year China became a net importer of coal for the first time by importing 104 million tons. To establish a national strategic reserve of coal is to avoid any potential disadvantage, just as China has faced in the iron ore market. Such a system may also help prevent China from exporting rare earth at discounted prices.

Experts explained unlike the hoarding of physical grain and oil, minerals such as coal should be stored in the form of intact resources, as the storage of physical coal would cost a lot more and is prone to natural wastage.

China now supplies more than 63 percent of global demand for rare earth. But the country’s generosity of dispensing this precious mineral at discounted prices over the past decades had made its measured reserves sharply dwindling, from 43 percent relative to the total preserves worldwide in 1995 to 36.52 percent in 2009. What’s more, China, as the world’s largest exporter of rare earth, rarely holds all the cards when it comes to pricing-setting issue in the overseas markets.

The experts call for the establishment of specific fund to support the strategy, through which China could purchase and store rare earth during the downward cycle of the market.