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China Seeking to Trim Exports of Rare-Earth Minerals


Post Date: 14 Dec 2013    Viewed: 367

China signaled that it is seeking to trim its exports of rare earths for the first time in two years, despite international pressure on Beijing to ease its grip on global supplies of the key minerals.


Despite a shrinking share of global output as rivals gear up production, China still controls about 80% of the world's supply of the 17 minerals, which are used to make everything from consumer electronics to car components to defense systems. Beijing controls release of the supply through export quotas, though China hasn't met its quotas over the past two years amid weakened demand.


On Friday, China's Commerce Ministry said it would set its first batch of rare-earth export quotas for 2014 at 15,110 metric tons, a 2.5% decline from the same batch last year. The quota for the first half of the year generally sets the trend for the year as a whole, as the first batch has generally been about half of the full-year quota. The government generally issues a second rare-earth quota around July.


If the second batch for 2014 is announced in line with past trends, the reduction would be the first since 2012, when China reversed course from steadily cutting the quota since 2005.


The reduction defies a World Trade Organization ruling against Beijing in October in a case that challenged the legality of Chinese restrictions on exports of rare-earth metals. China argues that the rare-earth industry is highly polluting and needs to be tightly controlled.


"The purpose of the WTO is to ensure equal treatment to nations on the imports of goods and services, not to limit the jurisdiction of countries over the export of its natural resources and not to treat free trade as the most important issue," said Mei Xinyu, a policy analyst with the Commerce Ministry.


Mr. Mei said at the time of the October ruling that China plans to appeal the WTO ruling, but may replace the quota with other export controls if an appeal fails.


In 2010, China cut its export quota by 40%, causing alarm among developed economies and the industries that consume these metals, which are used to manufacture a range of crucial technologies including missile-defense systems and smartphones.


Since then, prices have dropped sharply as the global economy has slowed, new sources come online and companies find ways to use less. Lanthanum oxide is around $6 a kilogram, a far cry from its height of $104 in 2011, according to data provided by Australian rare-earth producer Lynas Corp and Mineralprices.com, a pricing platform. Cerium oxide prices are also about 70% lower than last year, the data showed.


China's rare-earth exports have been rising in recent months as the global economy has recovered. Exports of rare-earth ore, metals and compounds are up 56% from a year earlier in the first 10 months this year, to reach 17,600 tons.


Still, that is only about 57% of this year's full-year quota, according to Chinese customs data. Last year, Chinese exporters used only 52% of the Commerce Ministry's allowance. In 2011, the volume was only 62% of the quota.


The actual export volumes, compared with the larger quota size, underline that a quota reduction may be less important on the ground than as a strategic message. "The export quota has become less important," North Square Blue Oak metals analyst Frank Tang said.


The latest quota includes 13,314 tons of light rare earth and 1,796 tons of medium-and-heavy rare earth, the ministry said Friday.


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