June 29 (Bloomberg) -- China, facing a trade probe by the World Trade Organization on raw material export constraints, will continue to curb shipment and production of minor metals to conserve resources and limit pollution, an official said.
“Tungsten, molybdenum and vanadium are mineral resources that give China an advantage and are non-renewable,” Zhang Fengkui, division head of raw materials at the Ministry of Industry and Information Technology, said in Beijing today.
China’s curbs on exports of some raw materials have triggered complaints by the European Union, U.S. and Mexico to the WTO, which is probing whether the policies give Chinese manufacturers an unfair edge. The nation in March said it stopped accepting applications for new mines to produce tungsten and antimony until June 2011.
The Chinese government cut the 2010 export quota on tungsten, used in high-temperature applications such as light bulbs and rocket engines, to 14,300 metric tons, from 14,600 tons the previous year. The quota on molybdenum, used to toughen steel, was unchanged at 25,500 tons, according to the trade ministry.
These minor metals “play an important role in the national economy,” Zhang said at a conference.
At the current pace of exploration and production, China’s resources of tungsten will last 20 years and molybdenum 100 years, Zhang said. The government in March said it wants to cap this year’s output of tungsten metal at 80,000 tons, antimony at 100,000 tons and rare earth at 89,200 tons.
“WTO rules allow nations to protect their own non-renewable resources, but require policies should apply not only to exports, but also local production,” Wang Qinhua, deputy secretary general of the China Nonferrous Metals Industry Association, said at the conference. China is studying policies to curb domestic mining and processing of minor metals to address WTO requirements, she said.
The Chinese government plans to draft a five-year guideline on minor metals, Wang said. Exports of value-added products may be encouraged, while overseas sales of goods with basic processing that are energy intensive and polluting will be restricted, she said.
The government may also limit tolling, or processing imported raw materials for export, for products including those for which export tax rebates were removed last week, Wang said.
Export tax rebates will be removed on some steel, nickel, zinc, tungsten, molybdenum and vanadium products from July 15, the finance ministry said on June 22.
WTO judges are probing complaints whether Chinese restrictions on nine raw materials including coke and zinc are discriminatory. China says the taxes are aimed at easing overproduction and emissions of carbon and sulfur gases.
China also restricts exports of rare earths, used to make parts in cell phones and radars, and the U.S. Trade Representative may be studying the limits for a trade case, industry officials said this month.
Molybdenum demand in China, the largest user, will climb 9.1 percent to 60,000 tons in 2010, from 55,000 tons last year, an executive at Jinduicheng Molybdenum Co. said at the conference today.
Chinese demand accounted for 31 percent of global consumption last year, said Ma Quanzhi, deputy general manager of Asia’s largest producer of molybdenum.
The discovery of deposits in Guangdong, Anhui, Xinjiang and Henan provinces will help Chinese production expand in the next few years, Ma said. China, the world’s largest producer, accounted for 37 percent of global molybdenum output last year, Ma said.
Producers’ costs have risen to between 1,500 yuan and 1,800 yuan a ton because of rising raw material and fuel costs, and taxes, Ma said.
The “uncertainties” of the world economic recovery and restarts of molybdenum mines in U.S. and Canada aren’t supportive of a price rally in the metal, he also said.
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