China Reins in Rare Earth Exports

China’s extraction and exportation of rare earth minerals, which are used in the manufacturing of a variety of high-tech goods including cell phones, cars, wind turbines, and radar systems, has been in the spotlight lately after authorities blocked to Japan during a diplomatic spat. Now, China, which controls 97% of the world’s of rare earths, plans to decrease global by 30% this year. The Financial Times reports:

The Beijing government lowered export quotas this year by 40 per cent from last year, and on Tuesday the China Daily, citing an unnamed official from the commerce ministry, said these would “continue to be axed” in the first half of next year.

“Strategic, environmental and economic considerations mean that the country [China] can’t afford to continue shouldering the burden of supplying the world,” said Chao Ning, a foreign trade section chief with the commerce ministry quoted in the article. The ministry’s Beijing press office did not respond to a request for comment.

China has long cited environmental concerns as the rationale for its quota cuts, but countries such as Japan that import rare earths are increasingly worried that Beijing will seek to use its monopoly position for political leverage.

Yet, according to Bloomberg, officials are denying the report from the official China Daily:

China has no definite plans to cut its export quota for rare earths next year, a senior official at the department responsible for the minerals said at a conference in Xiamen today.

“There is no such thing,” Jiang Fan, deputy director general of the department of foreign trade at the Ministry of Commerce, told Bloomberg News. “I haven’t heard any policy that China will reduce rare earth exports by 30 percent next year.”

Nevertheless, recent cuts have already impacted economies including Germany’s. From the New York Times:

China’s curtailing of rare earth exports is causing so much concern in Germany that industry and government are joining forces by appealing to the European Commission and the World Trade Organization to intervene, industry officials said Tuesday.

China’s exports of rare earths declining by as much as 40 percent worldwide over the past ten months, according to the Federation of German Industry. That decline has set off alarm bells in Germany, one of the world’s largest export-driven economies and whose industry relies heavily on rare earths.

So great is the anxiety by the business community here that a special conference dedicated to the issue will be held next week in Berlin.

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