China to Cap 2011 Rare Earth Output at 93,800 Tons

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"Beijing has sought to impose more discipline on its REE industry but policies alarm foreign markets."

China will cap its total output of rare earth oxides at 93,800 tons this year, up 5% from last year, Reuters reported.

The country's land and resources ministry said that the ministry would not approve any new prospecting or production licenses for rare earths tungsten or antimony until June 30th 2012. Beijing has sought to impose more discipline on its rare earths industry but a series of policies aimed at cleaning up the sector has alarmed foreign markets.

China produces 97% of global rare earth supplies giving it a stranglehold over a range of elements used in mobile phone handsets and hybrid car batteries as well as wind turbines and weapons guidance systems.

Beijing has already slashed export quotas by 35% for the H1 of 2011, and the decision has choked off global supplies and driven prices up to record levels.

The country also plans to set up a strategic stockpile that will give it more say over global prices. It is also cracking down on an illegal rare earth export market that amounted to as much as 10,000 tons of supply last year.

Chinese officials have said that high levels of rare earth production were not environmentally sustainable, and that China also needed to retain supplies for domestic industries.

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