China slashes rare earth export quotas

BEIJING, Dec. 29 (UPI) -- China will cut its quota on rare earth exports by approximately 35 percent for 2011, the Ministry of Commerce announced Tuesday.

This latest reduction comes after Beijing slashed its rare earth export quota 72 percent for the second half of 2010. China typically issues two rounds of quotas each year.

China's continued curbs on rare earths are likely to fuel more anxiety among global buyers regarding China's strong hold on the 17 elements. While China has about 30 percent of global rare earths reserves, it produces 97 percent of the world's supply.

Rare earths are crucial for green energy and high-tech components such as wind turbines, low-energy light bulbs, batteries for hybrid and electric cars, lasers, fiber-optic cables, cellphones and flat-screen monitors. The elements are also used for military applications, such as missiles.

The Chinese Ministry of Finance also said on its Web site last week that China will raise the export taxes for some rare earth minerals to 25 percent in 2011.

The Chinese government had also imposed an unannounced embargo on shipments of raw rare earth minerals to Japan from mid-September to late November, due to a diplomatic dispute between the two countries.

China's continued restrictions, coupled with uncertainty regarding Beijing's policies, are likely to accelerate the opening of mines in other countries, said Dudley Kingsnorth, a rare earth industry executive and consultant in Perth, Australia, The New York Times reports.

"It's only a matter of time before China is not the major supplier to the rest of the world," he said, adding that there could be supply problems until the other mines can open.

A U.S. Department of Energy report released Dec. 14 warned that unless the United States diversifies its sources for rare earth minerals, manufacturers of clean energy products are at risk of major supply disruptions.

China's quota announcement drew a quick response from the Office of the U.S. Trade Representative in Washington.

"We are very concerned about China's export restraints on rare earth minerals," a spokeswoman for the office, Nefeterius Akeli McPherson, told the Times. "We have raised our concerns with China and we are continuing to work closely on the issue with stakeholders."

China defended the cuts, citing environmental concerns.

"China's measures are for the sake of protecting the environment for the sustainable development for the industry," said Zhang Anwen, deputy secretary-general of the Chinese Society of Rare Earths, China Daily reports.