Chinese officials are signaling plans to further reduce rare-earth exports next year, sustaining its controls of the metals-- key ingredients in high-technology batteries and defense products--that have already severely frustrated foreign governments.
Chinese officials are signaling plans to further reduce rare-earth
exports next year, sustaining its controls of the metals-- key ingredients in
high-technology batteries and defense products--that have already severely
frustrated foreign governments.
"Reducing the export quotas is under consideration, but it's too early to
talk about any reduction rate," Lin Donglu, secretary general of the
Chinese Society of Rare Earths, told Dow Jones Newswires on Tuesday. The
state-run English-language China Daily on Tuesday quoted an unnamed Commerce
Ministry official suggesting that cuts of as much as 30% from already-trimmed
2010 levels are possible. A Commerce Ministry official declined to confirm the
report, and the ministry didn't reply to faxed questions Tuesday.
Speaking at a conference on rare-earth elements in southeastern
China
on
Tuesday, Chinese officials, including a Commerce Ministry deputy director,
Jiang Fan, highlighted their concern about aggressive development of the
country's resources, attendees said. One official there suggested
China
, by
far the world's largest producer and consumer, could even become an importer.
"Their main thrust was
China
needs
to work to protect its rare-earth industry," said Nigel Tunna, managing
director of Metals Pages Ltd., host of the conference.
(This story and related background material will be available on The Wall
Street Journal website, WSJ.com.)
China
's
decision in recent months to impose tougher quotas on rare-earth metal exports
has sparked outcry from
Tokyo
to
Washington
.
China, which uses around half of its output of the elements and produces around
97% of world supply, said its limits--which this year aim to cut exports around
40% from 2009--reflect its growing environmental awareness, are perfectly legal
and won't be used as a policy tool.
Yet foreign importers worry reductions are designed to lift their metals import
costs, undermine their high-technology industries and unnerve their defense
departments. The metals, 17 chemically similar and expensive-to-mine elements,
are critical to the manufacture of products from iPhones to smart bombs.
Asked at a news conference Tuesday whether limits have been imposed on export
of rare-earth metals to
Japan
--the
world's biggest importer and recently embroiled in a diplomatic spat with
Beijing
--Ministry
of Foreign Affairs spokeswoman Ma Zhaoxu sidestepped the question, saying the
government rare-earth controls are "not only for
China
's
development, but for the world's development."
In an interview Tuesday, a local official in one of
China
's
rare-earth processing regions said a cut in
China
's
output toward 100,000 metric tons in 2011 from about 120,000 tons this year
would be in line with official policy.
China
dominates global production of rare earth, but it hasn't always done so. During
the 1990s, the Chinese government pursued a policy to expand its industry, at a
time when many Western producers were succumbing to high costs and tightening
environmental controls. Deposits of the elements are found in numerous places
and mining, technology, defense and investment companies are now scrambling to
establish alternatives to increasingly uncertain imports from
China
,
sparking something akin to a mini-gold rush. The activity has hastened after
Beijing
's
latest quota was announced in July.
MolyCorp. Inc. (MCP) Chief Executive Mark A. Smith told Tuesday's conference,
according to a text of his presentation, that his Colorado-based company is on
track and within budget to deploy a manufacturing supply chain by the end of
2012 that includes production of nine of the "most commercially
significant" rare earths.
Fresh mining at MolyCorp's
Mountain Pass
,
Calif.
,
mine--once the world's largest rare-earth producer--will begin next year, Smith
said, with output of 20,000 metric tons of rare-earth oxides expected by the
end of 2012. A further increase to 40,000 tons would take as much as another 18
months and cost as much as $200 million, Smith said.
"There is little question that it will take many nations and many
producers doing their best to increase production if we are to meet rising
demand in the clean energy, high-tech, defense and pollution-control
sectors," Smith said.
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