China will shake up its rare earths sector over the next five years, Chinese Premier Wen Jiabao (溫家寶) said yesterday, as the country steps up controls over the production of the vital metals that have worried importers.
China, which produces about 97 percent of the global supply of the minerals used in smartphones, electric car motors and high-tech industrial equipment, cut export quotas by 40 percent last year, a move that alarmed buyers and trading partners.
Wen told a Cabinet meeting that the country’s rare earths industry had been harmed by illegal mining and “chaotic” exports, though he added that China would set “reasonable” quotas for mining volumes and exports.
“We will fully take into account both domestic resources, production and consumption, as well as the international market, and reasonably set annual quotes for total volumes of rare earth mining production and for exports,” said an official account of the meeting carried on the central government’s Web site.
It will take five years for China to create an orderly and efficient rare earths sector, the statement cited Wen as saying.
Beijing has cut export quotas for the first half of this year by 35 percent from a year ago, although total quotas for this year have not yet been announced. China says the quota cuts will prevent reckless and polluting mining of deposits.
China’s moves have raised hackles in major trading partners such as the US, the EU and Japan. The US Trade Representative office has threatened to take China to the WTO over its export restraints.
The rare earths issue adds to the growing list of trade-related disputes between China and the US, including complaints that the yuan is undervalued.
US makers of high-tech products such as Apple Inc’s iPhone and various Japanese companies have been scrambling to secure reliable supplies of the minerals outside China as Beijing steadily reduces export allocations.
The official China Securities Journal reported yesterday that China would soon publish rules to strengthen supervision of the country’s rare earths industry in a move that was likely to “drastically” change the landscape of the sector.
New rules will require Chinese rare earths producers to make better use of natural resources, reduce pollution, control the scale of mining and adopt more advanced mining technologies, the newspaper said, citing unidentified government sources.
The regulations will also encourage consolidation of China’s rare earths industry, it added.
China’s International Business Daily reported on Tuesday that the country was likely to create a rare earths industry association in May to help its miners obtain more pricing power in the global market.