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China To Limit Rare Earth Exports

Tue, 09/01/2009 - 4:35am

JOE McDONALD AP Business Writer - September 1, 2009

BEIJING (AP) — Beijing plans to curb exports of rare earths, exotic metals used in computers and clean-energy products and of which China is the only major supplier, according to Chinese news reports.

Beijing wants to conserve scarce resources and protect the environment, the 21st Century Business Herald and other newspapers said, citing a proposal by the Ministry of Industry and Information Technology. They said curbing supplies could push up slumping global prices and boost China's revenues, though they did not say that was a government goal.

A ministry spokeswoman contacted by phone said she knew nothing about such a plan. She refused to give her name.

China accounts for 95 percent of global production and about 60 percent of consumption of rare earths, which include such minerals as dysprosium, terbium, thulium, lutetium and yttrium, according to the U.S. Geological Survey. China supplies more than 90 percent of such materials used by U.S. industry.

Rare earths are used in making ultra-lightweight magnets and other high-tech products.

As rumors of possible Chinese curbs circulated last month, industry publications warned they could affect manufacturers of low-energy light bulbs, computer disk drives, electric motors, lasers and catalytic converters.

China's trading partners have objected to similar curbs on exports of industrial materials as a violation of its free-trade commitments.

The United States and European Union filed World Trade Organization complaints June 23 accusing Beijing of unfairly favoring its steel, chemicals and other industries by restricting access to nine types of key materials. China is the leading supplier of coke and a major source of some other materials.

The U.S. Embassy said it is aware of the draft plan on rare earths but has not seen its contents.

"We note that the WTO has strong rules to discipline export restraints and we would be concerned by any member of the WTO whose policies appear to be inconsistent with its WTO obligations," said the spokeswoman, Susan Stevenson.

The United States supplied nearly all its rare earths needs from its own mines as recently as 1990, according to the U.S. Geological Survey. But it says American output plunged as the market was flooded by low-cost ore from China, which had lower labor costs and less-stringent environmental controls.

Beijing is limiting this year's rare earths exports to 31,300 tons, down 8.1 percent from 2008, the newspaper China Business News said. It said the proposed plan calls for capping exports at 35,000 tons per year in 2010-2015.

"One aspect is to protect the environment and at the same time to conserve China's rare earths resources," the newspaper said.

Newspapers noted the curbs could boost Chinese revenues by propping up prices that plunged due to weak demand amid the global financial crisis.

Several reports said Japan and other consumers built up rare earths stockpiles this year at low prices. They complained that buyers got Chinese resources too cheaply.

"If you are gold, you don't sell at potato prices," said the newspaper China Business News.

Chinese demand for rare earths has surged as manufacturers shift production of computers, mobile phones and other products to factories in China.

Western miners of rare earths say Chinese export curbs could revive demand for their output.

Molycorp Minerals LLC, based in Greenwood Village, Colorado, says it is trying to expand production at its mine in Mountain Pass, California. The company says the California mine is the richest rare earths deposit outside China.

"With some consumers expected to struggle to secure supplies, the development schedules for several Rare Earths projects in North America could be brought forward to fill the void," said a statement by the Canadian mining company Matamec Explorations Inc.

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