Chasing Rare Earths, Foreign Companies Expand in China

China’s policy on rare earth minerals, used in the manufacturing of numerous high-tech goods including cell phones and hybrid cars, has been under scrutiny over the past year as the country holds a near monopoly on the resource, which is in high demand around the world. Now foreign companies are increasingly opening factories in China to process the materials, the New York Times reports:

Companies like Showa Denko and Santoku of Japan and Intematix of the United States are adding new factory capacity in China this year instead of elsewhere because they need access to the raw materials, known as rare earth metals.

“We saw the writing on the wall — we simply bought the equipment and ramped up in China to begin with,” said Mike Pugh, director of worldwide operations for Intematix, who noted that the company would have preferred to build its new factory near its Fremont, Calif., headquarters.

While seemingly obscure, China’s policy on rare earths appears to be directed by Prime Minister Wen Jiabao himself, according to Chinese officials and documents. Mr. Wen, a geologist who studied rare earths at graduate school in Beijing in the 1960s, has led at least two in-depth reviews of rare earths this year at the State Council, China’s cabinet. And during a visit to Europe last autumn, he said that little happened on rare earth policy without him.

China’s tactics on rare earths probably violate global trade rules, according to governments and business groups around the world.

August 24, 2011 1:36 PM
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