China defends rare earths policy

June 21, 2012 at 12:34 PM
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BEIJING, June 21 (UPI) -- China issued its first white paper on the country's rare earth industry policies, saying it would introduce reforms.

However, the government gave no indication that export quotas on rare earths -- a collective name for 17 metals used in the electronics, defense and renewable energy industries -- would be lifted.

In March, the United States, Japan and the European Union filed a complaint with the World Trade Organization against China's export restrictions and tariffs on metals including rare earths.

The WTO complaint says that the export quotas and tariffs violate free trade rules by putting pressure on companies to open factories to China to have access to the country's supply of rare earths.

But the rationale of the Beijing's white paper released Wednesday follows the lines of what Chinese officials have long argued: that the country's policy on rare earths export restrictions is motivated by environmental concerns.

"Excessive rare earth mining has resulted in landslides, clogged rivers, environmental pollution emergencies and even major accidents and disasters, causing great damage to people's safety and health and the ecological environment," the white paper states.

Su Bo, vice minister of Industry and Information Technology, maintained that China is not using environmental protection as an excuse for raising prices.

"No government in any country would tolerate such severe pollution," he said, The Sydney Morning Herald reports.

Su said the government will invest about $600 million to clean up environmental after-effects associated with rare earths mining and it aims to close down polluting producers as well as limit the use of out-of-date technology involved in the extraction of the raw minerals.

While China has about one-third of global rare earth deposits, it produces about 95 percent of the world's supply of rare earths.

But in the white paper China says it has 23 percent of global rare earth deposits and that it has depleted the most accessible reserves.

China's grip on the minerals began more than 25 years ago when it flooded the market with cheap rare earths, forcing the closure of mines in other parts of the world.

Gao Yunhu, deputy chief of the Ministry of Industry and Information Technology's Rare Earth Office said Wednesday that while Beijing is willing to strengthen communication and negotiations with trade partners, it "will actively use WTO rules to protect the legitimate rights and interests of the country," The Wall Street Journal reports.

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