China Signals Further Rare Earth Cuts

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"Officials say cuts reflect China's growing environmental awareness."

Chinese officials are signaling plans to further reduce rare-earth exports next year, sustaining its controls of the metals—key ingredients in high-technology batteries and defense products—that have already severely frustrated foreign governments.

"Reducing the export quotas is under consideration, but it's too early to talk about any reduction rate," Lin Donglu, secretary general of the Chinese Society of Rare Earths, told Dow Jones Newswires on Tuesday. The state-run English-language China Daily on Tuesday quoted an unnamed Commerce Ministry official suggesting that cuts of as much as 30% from already-trimmed 2010 levels are possible. A Commerce Ministry official declined to confirm the report and the ministry didn't reply to faxed questions Tuesday.

Speaking at a conference on rare-earth elements in southeastern China on Tuesday, Chinese officials, including a Commerce Ministry deputy director, Jiang Fan, highlighted their concern about aggressive development of the country's resources, attendees said. One official there suggested China, by far the world's largest producer and consumer, could even become an importer.

"Their main thrust was China needs to work to protect its rare-earth industry," said Nigel Tunna, managing director of Metals Pages Ltd., host of the conference.

China's decision in recent months to impose tougher quotas on rare-earth metal exports has sparked outcry from Tokyo to Washington.

China, which uses around half of its output of the elements and produces around 97% of world supply, says its limits—which this year aim to cut exports around 40% from 2009—reflect its growing environmental awareness, are perfectly legal and won't be used as a policy tool.

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