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China Almost Doubles Rare-Earth Export Quota in Second Half After WTO Move
By Jason Scott - Jul 14, 2011
China, the biggest supplier of rare earths, almost doubled its export quota for the second half less than two weeks after the World Trade Organization found that its limits on raw-material shipments broke global rules.
The country raised the quota for 26 companies to 15,738 metric tons, according to a statement on the Ministry of Commerce’s website today. That compares with 7,976 tons for the year-ago period and brings the limit to 30,184 tons for 2011, little changed on 30,258 tons in 2010, government figures show.
Rare earths -- 17 chemically similar metals -- are used in hybrid cars and wind turbines. China has curbed output and exports since 2009 to conserve resources and protect the environment, tightening global supplies and prompting users such as Japan to seek alternative sources.
“It’s below the requirements of the non-China market and will keep supplies tight,” Matthew James, a Sydney-based spokesman for rare-earth developer Lynas Corp., said in a phone interview today, referring to the latest quota. “This situation could remain until new suppliers enter the market.”
The European Union criticized the new quotas because they bring about no “noticeable change” in the amount of rare earths that China will ship to the 27-nation bloc. The addition of ferrous alloys means the quota is actually being tightened because more products will compete for a limited amount of rare earths, said John Clancy, the EU’s trade spokesman.
‘Highly Disappointing’
“This is highly disappointing and the EU continues to encourage the Chinese authorities to revisit their export restrictions policy to ensure there is full, fair, predictable and non-discriminatory access to rare earth supplies as well as other raw materials for EU industries,” Clancy said in a statement from Brussels.
The composite price of eight rare earths found at the Mount Weld project in Western Australia surged to $223.16 a kilogram (2.2 pounds) as of July 11 from $92.84 on March 31 and $11.59 in 2007, according to a table of figures on the website of Lynas.
The July 5 WTO ruling followed U.S. and EU complaints. China said then that it was assessing the report and Mei Xinyu, a professor at a government trade institute, said an appeal was highly likely.
The WTO issued its decision after an 18-month investigation of Chinese quotas, export duties and license requirements on industrial ingredients such as coke, zinc and bauxite. Chinese Commerce Minister Chen Deming said countries with abundant reserves of rare earth shouldn’t criticize China’s export restrictions on the resource, the People’s Daily reported on July 7, without saying where he made the comment.
Trade Ties
The restrictions had stoked tensions between China and its trading partners, which said the world’s fastest-growing major economy adopted unfair commerce and currency policies.
“China seems to have increased the second batch of quotas from the same period last year,” Ju Guoxian, an analyst at Minsheng Securities Co., said today. “China sharply reduced the quota last year to rein in over-exploitation and environmental degradation caused by those illegal mining.”
Once some of those companies upgraded their operations to meet environmental standards and received proper licenses, the government now seems willing to increase quotas, Ju said.
The world’s most populous nation will raise standards for exporters and won’t approve new project expansions in an effort to curb overcapacity, illegal mining and sales, the government said in May. The Ministry of Land and Resources said it wants to set aside some rare earth deposits.
Rare earths are also used in defense applications such as guided missiles. The market for the minerals may double to as much as $6 billion by the middle of the decade, according to an April 21 report by Ernst & Young LLP analyst Michel Nestour.