China's new rare earth policies could sharply <br>diminish exports of critical minerals, <br>weakening Western manufacturers

By IBTimes Staff Reporter

China is moving ahead with efforts to impose new controls and oversight on its critical rare earths industry, a move that could further raise the minerals' prices and curtail the availability of key materials for U.S. and other Western manufacturers and technology companies.

The new steps would "implement stricter environmental policies for extraction of rare earth resources," China's vice-minister of Industry and Information Technology, Su Bo, told Chinese rare earths industry leaders and media on April 8. In practical terms, this would lead to more export restrictions on minerals that are essential for components used in everything from smart phones to hybrid vehicles, as well as wind turbines, computers, LCD monitors, missiles and petroleum refining.

In addition, Su said that the country would place all 142 rare earths companies in China into a single organization, the Rare Earths Industry Association, which would allow Chinese officials to enforce stricter environmental and resource development standards over rare earths production and sales.

The official rationale for these new moves is that there is growing concern about environmental degradation and the increasing scarcity of rare earths, which are a group of 15 lanthanide minerals, along with scandium and yttrium, that are found in naturally occurring ores and then refined into oxides and metals.

Combined with China's near-monopoly in rare earths minerals -- in 2011, the country produced 97 percent of the world's supply -- China's more aggressive policy toward protecting this industry has Western nations on edge; they fear that they will not be able to purchase these materials in sufficient quantity (at least at a reasonable price) in the future. Indeed, in March, the U.S., EU and Japan brought a case against China before the WTO, claiming that China is increasingly limiting exports of rare earths in violation of free trade rules. The case is still pending.

Unavoidable Trend

China began cutting down on exports of rare earths after 2009, when it sent abroad only 50,000 metric tons of the minerals, less than half of its production. According to USGS estimates, China produced approximately 120,000 metric tons of rare earths that year. Two years later, China produced 130,000 metric tons, and it exported a little over 30,000 metric tons, or just 23 percent of its production.

China's 2012 export quota for rare earths will be unchanged at around 31,000 metric tons, based on initial calculations on data released by the country's Ministry of Commerce. But WesternLebron Soldiers X 10