China Slashes Rare Earth Exports


"China cut export REE quotas by 72% for the second half."

China, the world's largest rare-earths producer, cut export quotas for these minerals by 72% for the second half, raising the possibility of a trade dispute with the U.S.

Shipments will be capped at 7,976 metric tons, down from 28,417 tons for the same period a year ago, according to the Ministry of Commerce yesterday.

Rising production of hybrid cars and music players such as Toyota Motor Corp.'s Prius and Apple Inc.'s iPod have driven up demand for REEs even as China cut the quotas to shore up prices and ensure domestic supplies. The U.S. is looking at building a trade case on the restrictions, industry representatives said last month.

"The rare earths industry officials have realized that, after many years of continued growth in exports, the industry didn't receive due profit returns," Liu Aisheng, director of the Chinese Society of Rare Earth, said in a phone interview from Beijing. "They adjusted the policy to ensure that the resources are optimally utilized."

The U.S. has asked business groups and unions to provide evidence that China is hoarding rare earths for a case that may be filed at the World Trade Organization, according to industry representatives who asked not to be identified.

A rare-earth mine in the U.S., in Mountain Pass, California, shut down most operations in 2002. Molycorp Inc., which owns the mine, plans to reopen it this year.

China needs to restrict exports and production because domestic supplies won't be enough to meet its own needs, the Ministry of Industry and Information Technology said in September.

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