By: Reuters 20th October 2010 Updated 1 hour 47 minutes ago TEXT SIZE Text Smaller Disabled Text Bigger
BEIJING - China on Wednesday denied a report that the government plans to cut export quotas of rare earth metals by 30% next year, seeking to ease international jitters about China's stranglehold on supplies.
Any cut in Chinese supplies could rattle firms which use the range of metals to make parts of autos, computers and cell phones, missiles and new energy technology.
A spokesman for China's Commerce Ministry, Shen Danyang, declined to answer questions about whether the government may have plans to reduce export quotas, but he told Reuters that a report in the China Daily on Tuesday that exports would be cut by 30% were "unfounded."
"The paper said they had interviewed a Ministry of Commerce official, but the external trade section that is in charge of this area checked and said that never happened," said Shen.
The official Xinhua news agency also reported a denial. An unnamed commerce official called the report "false" and "groundless," Xinhua said.
"China will continue to supply rare earth to the world," the ministry said, according to Xinhua.
The denials may do little to reassure companies and foreign governments nervous about supplies after the New York Times reported that China had blocked some shipments to the US and Europe. US trade officials said they were checking the report.
More than 90% of global production of rare earths comes from China, although other countries have big untapped reserves.
Japan's Kyodo news agency reported that an unnamed diplomatic source in Beijing said custom clearances of rare earth shipments to the US and Europe were being held up by tighter inspections. The report did not mention any outright embargo.
The slowdown in shipments may reflect a sharp drop in export quotas, which has left over-committed traders scrambling to cover orders placed in the first half of the year, analysts said.
"It's just that there aren't enough quotas, after the second-half cuts. Some companies signed too many orders in the first half, not realising the quotas would be cut back," said Mary Zhang, rare earths analyst for Asian Metals in Beijing.
"There are no country-specific cuts. I think the reports show that Japan and the other countries are coordinating action to pressure China to loosen its export policy, because its true supplies are very tight."
PROTECTIONISM FEARS
Reports that China had halted shipments of rare earths to Japan during a sea territory dispute has raised the spectre that Beijing could use its dominance of supplies as a political lever.
The China Daily cited an unnamed commerce ministry official as saying Beijing would reduce export quotas to protect the country's rare earth resources from over-exploitation.
China's reserves of rare earth dropped by 37% between 1996-2003 and might run dry within 15 to 20 years if the current rate of production is maintained, the Ministry of Commerce said last week.
Premier Wen Jiabao said earlier this month that China's measures to control rare earths exports were geared to "sustainable" exploitation of the minerals and pledged not to impose a complete ban on exports.
China has been steadily reducing export quotas since 2005 for rare earth elements, which consist of 17 metals.
Just three months ago, Beijing said it was slashing export quotas for the metals by 72% for the second half of 2010 to 7 976 t, compared to 28 417 t a year ago. Total quotas for 2010 were about 40% below 2009 levels.
The People's Daily, in an editorial published on Monday, said it was unrealistic to expect China to continue to meet 90% of global rare earth demand when it holds only 30% of total reserves.
Japan last month accused China of halting shipments amid a political dispute, sparking allegations that Beijing was using its monopoly over the resources as a political tool. Edited by: Reuters
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