The country’s rare-earth export policies are closely watched as it controls 95% of the world’s production of the metals, which are crucial in a wide range of high-tech applications including defence systems, wind turbines and smartphones.
For the manufacturers that use rare earths, the quota increase is largely symbolic. Actual exports have fallen sharply, with exporters using up only around half of last year’s quota. Customs data Tuesday showed exports in the first seven months this year are down 37%.
The Ministry of Commerce said in a statement that it would set the second batch at 9,770 tons, resulting in a full-year quota of 30,996 metric tons. That’s 2.7% higher than last year’s 30,184 tons. The ministry typically issues the quota in two batches each year.
The second batch includes 8,537 tons of light rare earths and 1,233 tons of medium to heavy metals.
“International pressure on China [to loosen export controls] has been quite high and the case has reached the World Trade Organisation,” North Square Blue Oak analyst Frank Tang said. “The government already said last year that it would keep its quota largely unchanged in 2012, and it’s now signalling to the wider world not to worry.”
Beijing might be re-evaluating the quota’s usefulness, and has roped in industry experts for discussions on removing the cap, Mr. Tang said.
Still, prices have fallen since last year due to weaker global demand. Prices of bellwether products such as neodymium oxide have more than halved since last year to around $105/ton Monday, according to Australia’s Lynas Corp.
Since China began to drastically cut quotas from 2009 to restrict exports, global suppliers have made headway in meeting the shortfall to help reduce dependence on Chinese supply.
U.S.-based Molycorp Inc has begun production at its California mine, and Lynas is due to start production at its Mount Weld facility this year. The two projects together could potentially account for about a third of global demand.Chuin-Wei Yap Wall Street Journal
- China ‘stockpiling rare earths for strategic reserves’ (chinadailymail.com)
- China defends curbs on rare earths (chinadailymail.com)
- Rare earth smuggling rampant in China (wantchinatimes.com)