SHANGHAI - China is not using its control over supplies of rareearth — exotic metals crucial in advanced manufacturing — as adiplomatic "bargaining chip," state media quoted Premier Wen Jiabao assaying during a visit to Europe.
Recent reports that Beijing had temporarily suspended shipments toJapan of the metallic elements, used in computer disk drives, hybridcar components and other high-tech products, has drawn attention toChina's near monopoly on the materials.
Speaking to a China-European Union business summit in Brussels, Wenechoed other Chinese officials in denying Beijing had ordered tradersto hold back rare earth shipments to Japan due to a recent flare-up intensions, the newspaper China Daily reported Friday.
"China is not using rare earth as a bargaining chip," said Wen, China's top economic official.
The government's official web site carried some of Wen's remarks,including his call for sustainable development of China's abundantreserves of the 17 minerals, which have exotic names like dysprosiumand terbium.
"What we pursue is to satisfy not only the domestic demand but alsothe global demand of rare earth. We should not only stand from thepresent, but should also look forward to the future," the government'saccount of Wen's remarks said.
"If rare earth minerals were used up, how would the world and China deal with the problem?" he said.
China produces 97 percent of the global supply of rare earths, andexperts forecast that annual demand could exceed 200,000 tons by 2014,far exceeding current production level of 124,000 tons a year.
"It is necessary to exercise management and control over the rareearth industry, but there won't be any embargo," the China Daily quotedWen as saying.
China has denied it was halting exports, but Japanese trading firmssaid shipments stopped around Sept. 21, held up at Chinese ports byincreased paperwork and inspections. That came after Japan arrested aChinese fishing boat captain whose trawler collided with two Japanesepatrol boats off disputed islands in the East China Sea.
Concern about rare earth supply had been brewing long beforeSeptember's restrictions to Japan. To cope with growing demand at home,China has been reducing export quotas of rare earths over the pastseveral years. In the second half of this year, the government hascapped overseas shipments at 7,976 tons, down 49 percent from the firsthalf, according to figures from China's Ministry of Commerce.
Shaken by the potential threat of supply disruptions to itsmanufacturers, Japan is considering becoming a global center for rareearth recycling and is partnering with Mongolia to develop new rareearth mines.
Japan's Cabinet on Friday approved new funding for securing rareearths as part of 5.05 trillion yen ($61 billion) in new economicstimulus.
Concerns over the issue are prompting a resumption of some projectsin the U.S. and Australia that had been postponed for years due tocompetition from cheap Chinese suppliers.
Meanwhile, the official Xinhua News Agency said Friday thatgeologists have discovered a large, still untapped new deposit incentral China's Henan province.
Authorities were drawing up plans to prevent illegal mining of the reserves, it said.