World Faces Hi-Tech Crunch as China Eyes Ban on Rare Metal Exports

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"Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China"

Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors and precision-guided weapons.

A draft report by China's Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tons a year, far below global needs.

China mines over 95% of the world's rare earth minerals, mostly in Inner Mongolia. The global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price.

Alistair Stephens, from Australia's rare metals group Arafura, said his contacts in China had been shown a copy of the draft—'Rare Earths Industry Development Plan 2009-2015.' Any decision will be made by China's State Council.

"This isn't about the China holding the world to ransom. They are saying we need these resources to develop our own economy and achieve energy efficiency, so go find your own supplies," he said.

Mr. Stephens said China had put global competitors out of business in the early 1990s by flooding the market, leading to the closure of the biggest U.S. rare earth mine at Mountain Pass in California—now being revived by Molycorp Minerals.

New technologies have since increased the value and strategic importance of these metals, but it will take years for fresh supply to come on stream from deposits in Australia, North America, and South Africa. The rare earth family are hard to find, and harder to extract.

New uses are emerging all the time. The Tokyo Institute of Technology has made a breakthrough in superconductivity using rare earth metals that lower the friction on power lines and could slash electricity leakage.

The Japanese government has drawn up a "Strategy for Ensuring Stable Supplies of Rare Metals." It calls for 'stockpiling' and plans for 'securing overseas resources.' The West has yet to stir.

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