China launches rare earth industry group as the West complains about export quotas

China's rare earth industry set up an association earlier this month with the goal of increasing regulation, maintaining sustainable development, and addressing international disputes. The industry received complaints from the US, EU and Japan last month after the Chinese government capped rare earth exports.

“Our primary goal is to implement regulations of rare earths industry on a national level and maintain a sustainable and healthy development,” said Gan Yong, Chairman of the Association of China Rare Earths Industry. "Rare earths are strategic resources to our country and we will continue to restrict the exports at around 30,000 tons per year.”

“The association will unite the corporations of the industry and allow them to deal with trading disputes with the West together,” said Yuan Zhibing, an analyst from CIConsulting. “It will give them the pricing power and the voice on the international market.”

Rare earths are used in high technology industries such as cellphone, automobile, and even missile manufacturing. Mining, refining, and recycling of rare earths have serious environmental consequences if not properly managed. China sits on 36 percent of the known rare earths reserves in the world and accounts for over 90 percent of the total trading volume.

Due to environmental and strategic reasons, China has been restricting the mining, processing and exporting of rare earths since 2009. The country cut the first round of export quota in 2011 by 35 percent at the end of 2010 and then halted the operation in three of its eight major mines in September 2011, which account for 40 percent of the country’s total production.

As China made its moves and sent shockwaves to the world’s rare earths market, the US, European Union and Japan together filed complaints with the World Trade Organization over Chinese limits on exports of rare earths last month.

“China’s restrictions on rare earths and other products violate international trade rules and must be removed,” said EU trade commissioner Karel De Gucht.