China boosts its yearly rare-earth export quota

China has increased its 2012 rare-earth export quota amid international pressure.
Written by Charlie Osborne, Contributing Writer on

The country controls 95 percent of the world's rare-earth metal production, which are used in a number of applications -- including the development of smartphones and mobile devices, defense systems and wind turbines.

The WSJ reports that this majority control, which affects mainly developers of tech products, has been a cause for concern internationally. Governments as well as individual corporations have maintained pressure on Beijing to loosen its grip, and now limits on these key minerals have been lifted.

The full year quota will now be set at 30,996 metric tons; 2.7 percent higher than last year. China generally runs exports in two batches, and so the second batch this year will be boosted to 8,537 tons of light rare earth minerals and 1,233 tons of medium to heavy metals.

North Square Blue Oak analyst Frank Tang said:

"International pressure on China has been quite high and the case has reached the World Trade Organization. The government already said last year that it would keep its quota largely unchanged in 2012, and it's now signaling to the wider world not to worry."

The quota increase may be more symbolic than anything, as export levels have fallen sharply -- global trade accounting for only half of last year's quota. Exports of rare-earth minerals fell 36.7 percent in the first seven months of this year.

China began restricting imports in 2009. Due to this, global suppliers have been required to source alternatives to cope with product demand -- which includes U.S.-based Molycorp's production at a mine in California, and Australian miner Lynas will be mining at its Mount Weld facility later in the year. Japan has found suppliers in Vietnam.

Beijing has defended the policy, saying that the export restrictions were put in place to control pollution levels -- even though a side-effect of the restriction has resulted in higher prices for these minerals.

Following a request by the U.S., EU and Japan, the WTO set a panel to analyze China's rare-earth policies earlier this year. However, the world's biggest producer of rare earth metals is likely to become an importer of heavy metals in as little as two years' time, according to a recent report.

Editorial standards