Wed, Dec 28, 2011 - Page 11 News List

China cuts rare earths export quota for next year

AP, BEIJING

China yesterday announced a cut in its rare earths export quota as it tries to shore up sagging prices for the exotic metals used in mobile phones and other high-tech goods.

China accounts for 97 percent of rare-earth output and its 2009 decision to curb exports while it builds up an industry to create products made with them alarmed foreign companies that depend on Chinese supplies.

In its latest quota, the Chinese Ministry of Commerce said exporters would be allowed to sell 10,546 tonnes of rare earths in the first half of next year. That is a 27 percent reduction from the quota for the first half of this year.

China’s export restrictions have strained relations with the US, the EU, Japan and other governments that have called on Beijing to remove its curbs and make its intentions clear.

TUMBLING PRICES

Despite production and export curbs, rare earths prices in China have tumbled as US and European economic woes dent demand for its exports. The government ordered its biggest producer to suspend output for a month in October to shore up prices.

However, the restrictions have made rare earths much more expensive abroad, giving Chinese makers of products that use them a price advantage and foreign manufacturers an incentive to shift operations to China.

LOW EXPORTS

In a sign of unusually weak demand, the Ministry of Commerce said actual Chinese exports of rare earths totaled 14,750 tonnes for the first 11 months of this year — the equivalent of just 49 percent of the total annual quota.

In another possible move to tighten control over exports, the ministry’s announcement said only 11 companies would be allowed to sell abroad. That is down from 26 companies given licenses for the first half of the year.

Rare earths are 17 elements including cerium, dysprosium and lanthanum that are used in manufacturing flat-screen TVs, batteries for electric cars and wind turbines. They are also used in some high-tech weapons.

Prices in China have fallen sharply since August, declining by 45 percent for neodymium oxide, by 33 percent for terbium oxide and by 31 percent for lanthanum oxide, according to Lynas Corp, an Australian rare earths producer.

PRICE DIFFERENCES

Its figures showed an equally striking gap between prices in China and abroad, with lanthanum oxide costing triple the Chinese level on global markets, neodymium more than twice as much and terbium oxide near twice as much.

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