Wed, Dec 29, 2010 page10

• China to establish rare earth group

  SUPPLY AND DEMAND: China has lowered its export quotas for rare earths and will also raise export taxes for some rare earth elements to 25 percent next year

  • Bloomberg
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  China, which supplies more than 90 percent of the world’s rare earth minerals, is close to establishing an association that will, under government oversight, work to “guide” the domestic industry.

  The China Association for Rare Earth will be organized under the authority of the Chinese Ministry of Industry and Information Technology and include the 93 largest domestic producers, Wang Caifeng (王彩鳳), a member of the committee overseeing the group’s formation, told reporters at a press conference in Beijing yesterday.

  The establishment of the association will need approval from the State Council, China’s Cabinet, and this may occur by May 1, she said.

  “The association will assist the government and companies in mining, production and international cooperation,” Wang said. “Our role will be similar to that of the China Iron and Steel Association and the China Nonferrous Metals Industry Association in guiding the rare earth industry.”

  Chinese industrial associations are state controlled and have been used as agents through which companies have negotiated with foreign suppliers and buyers, such as when the China Iron and Steel Association represented steelmakers in talks with iron ore suppliers on setting a prices.

  The US said last week it may file a WTO complaint against China over restraints on supplies of rare earths.

  Rare earths are 17 chemically similar elements, including neodymium, cerium and lanthanum, that are used in the production of electronics. The price of neodymium oxide, used in magnets in BlackBerrys, has increased more than fourfold from US$19.12 per kilogram last year to US$88.5 per kilogram because of rising demand and reduced supply from China, according to Sydney-based Lynas Corp, which is building a A$550 million (US$542 million) rare earths mine in Western Australia.

  Output and export of rare earths from China have been reduced because some of the companies mining the minerals were causing “severe” environmental damage and had to be closed, Wang said yesterday.

  “The industry is undergoing a restructuring period,” Wang said. “Lots of companies do not meet environmental protection standards and need to be closed. Excessive mining in southern provinces is still severe and it severely damages the environment. That is why China is controlling mining and naturally output and exports will be reduced,” she said.

  Separately, China cut its rare earth export quotas by 11 percent in the first round of permits for next year from the same period this year, according to Bloomberg News calculations based on a statement issued by the Ministry of Commerce.

  The government allotted 14,446 tonnes of rare earth exports split among 31 companies, according the statement. That compares with the first round last year of 16,304 tonnes, according to previous ministry statements. The government usually issues two rounds of export quotas each year.

  China will also raise export taxes for some rare earth elements to 25 percent next year, the Ministry of Finance said this month. The move is an increase from the 15 percent temporary export tax on neodymium, used in batteries for hybrid cars, including Toyota Motor Corp’s Prius.
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