China to Cut Rare Earth Export Quotas by Up to 30%, Daily Says

China may cut export quotas for rare earth minerals by as much as 30 percent next year to prevent overexploitation, the China Daily reported, citing an unidentified official from the Ministry of Commerce.

Reserves of medium and heavy rare earth minerals might be completely exhausted in 15 to 20 years at the current rate of production, the official said, according to the newspaper. Medium and heavy rare earth, also known as ion-absorbed-type rare earth, is more valuable than the lighter variety as it’s used in advanced areas such as missiles, the newspaper said.

China, controller of more than 90 percent of production of the materials used in cell phones and radar, cut its export quotas by 72 percent for the second half and reduced output, spurring a trade dispute with the U.S. The country may not be able to meet growing global demand as the government continues to curb output, Sydney-based Lynas Corp. said in March.

Domestic rare earths deposits dropped to 27 million metric tons by the end of 2009, or just 30 percent of the world’s total known reserves, from 43 million tons, or 43 percent of the world total, in 1996, Chao Ning, section chief of foreign trade at the ministry said at a Beijing conference on Oct. 16.

China’s verified reserves of ion-absorbed-type rare earth stood at 8 million tons in 2008 and reserves of light rare earth totaled 50 million tons to 60 million tons, the newspaper said, citing the Ministry of Land and Resources data.

Japan, the world’s biggest importer of rare earths, will urge China to boost shipments of the minerals after a government survey showed that 31 Japanese buyers reported problems with exports, Trade Minister Akihiro Ohata said in Tokyo Oct. 5.

China ‘Hoarding’

The U.S. has asked business groups and labor unions to provide evidence that China is hoarding these elements for a case that might be filed at the World Trade Organization.

Production and export quota cuts are to protect the environment and in line with WTO rules, Yao Jian, spokesman for China’s Ministry of Commerce, said last week. China “cannot rule out the possibility that China may need to rely on imports” sometime in the future for, the ministry’s Chao said Oct. 16.

Rare earths are a group of 17 chemically similar metallic elements, including lanthanum, cerium, neodymium and europium. The U.S. was self-sufficient in the materials until the mid-1980s, when lower labor and regulatory costs helped China’s climb to dominance, the U.S. Geological Survey said in a report.

Prices of rare earths in China rose by “fractionally more than 20 percent since 1979 to hit an average of $8,500 a ton in 2009,” the China Daily report said.

Prices started to pick up in the middle of 2009 following the government’s decision to reform the industry by cracking down on illegal mining practices and by reducing exports, the report said.

Some of the major rare earth oxides, such as neodymium, had rallied to 24,600 yuan ($3,703) a ton by the end of September, a rise of 80 percent from January, the newspaper said.