Concern as China cuts rare earths exports

China has slashed exports of rare earths to keep up with domestic demand and attract manufacturers to open plants in the country.

The first batch of export quotas for 2011 saw a reduction of 35 percent compared to the same period in 2010. The allocation, currently at 14,446 tonnes, is not the total amount of exports for the year; a second allocation is expected to be announced in July, according to Metal Pages, a market database.

Rare earths are a range of metals used in manufacturing a plethora of products, including wind turbines, electric cars, mobile phones, computer hard drives, catalysts and power tools. China produces almost 97 percent of the world’s rare earths and its consumption of minerals accounts for 60 percent of the total global demand, according to Metal Pages.

U.S. and Japanese manufacturers of hybrid cars and high-tech electronics will see rising prices as supply declines and will be forced to find rare earths outside China or look for alternative material, it said.

China’s rare earths can cost ten times more when exported compared to local prices, according to media reports. That has encouraged manufacturers to open plants in China to circumvent the high prices.

Neodymium – an important element in the production of lightweight, powerful magnets that are used in goods ranging from iPhones to wind turbines – has a price tag of about $40,000 (30,450 euros) per metric ton in China and double the amount when exported. Lanthanum, used in catalytic converters that clean tailpipe pollution in petrol-powered cars, costs less than $5,000 (3,806 euros) locally, but about $50,000 (38,063 euros) outside China, because of export restrictions, according to the New York Times.

The U.S. has threatened that it may take China to the World Trade Organization over its export quota system on minerals, including rare earths. Earlier this month, a U.S. Energy Department report warned that it may take up to 15 years to break from Chinese imports of rare earths, the New York Times reported.

Ali Sheikholeslami,
euronews correspondent in London

Copyright © 2012 euronews