China Reaches Out on Rare Earth

Export quotas on China’s rare earth minerals were called into question last month at the WTO, not the first time China has been multilaterally confronted over this issue. The Wall Street Journal reports on what may be China’s attempt to address the WTO complaint:

China extended what it may have intended as an olive branch to the U.S., Japan and Europe in their dispute over rare earths even as it defended its export controls.

China controls nearly all the world’s production of rare earths—a group of 17 minerals with high-tech uses ranging from personal computers to advanced weaponry—but hopes to move up the value chain to become a manufacturer as well as supplier of rare-earth-based products.

As part of that strategy it has repeatedly invited foreign companies to work on China-based rare-earth joint ventures, both to bolster its own technological capabilities and address foreign complaints over its rare-earth quotas. But the latest gesture’s emphasis on environment technologies and the singling out of the U.S., the European Union and Japan—which last month filed a rare-earth action before the World Trade Organization—as potential collaborators appeared to be an effort at least partly intended to address the WTO complaint.

[...]“There could be two elements,” said Michael Komesaroff, an expert on China’s metal industry with the consulting firm Urandaline Investments. “One is that the Chinese may genuinely have a desire to improve environmental interests and they think they can learn from foreign technology. Another is that this is an olive branch because of the trade complaint taken to the WTO by the U.S. and the EU.”

It has been noted that China’s willingness to assume the environmental cost of rare earth extraction is a major reason for its dominance of the industry, and China repeatedly claims that the motives for limiting rare earth exports are based on environmental stewardship. From China Daily:

At a regular press conference, Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology (MIIT), reiterated that comprehensive measures to regulate China’s rare earth industry, including production caps, export quota cuts and stricter emission standards, are in line with WTO rules.

“The disorderly development of the rare earth industry has caused enormous damage to the environment,” Zhu said, warning that the environment will suffer greatly if rare earth exploitation is not regulated.

He said China’s regulations are created after fully considering the ability of the environment to ensure effective supplies of rare earth metals.

He added that China is willing to cooperate with foreign companies in recycling rare earth metals and developing substitutes for the metals.

Beijing Review has more from the domestic press about a newly formed organization to “spur healthy development of the industry,” while a Daily Mail story reports on the economic importance and severe environmental damage of rare earth development in China. Also see “Pollution in Fashion and Under Rugs,” and prior coverage of rare earth elements and exported pollution, via CDT.

April 25, 2012 3:59 PM
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