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China Defends Rare Earth Export Control as Environmental Choice
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By Bloomberg News

Aug. 29 (Bloomberg) -- China defended its controls on exports of rare earth after Japanese officials raised concerns about supplies of the raw materials used in the manufacture of products from cell phones to radar.

Restrictions on the rare earth industry will help protect the environment, the state-run Xinhua News Agency cited Chen Deming, Chinas commerce minister, as saying yesterday at a media briefing during China-Japan economic talks in Beijing.

China cut its export quotas for rare earth by 72 percent for the second half of this year, according to data from the Ministry of Commerce on July 8. Shipments will be capped at 7,976 metric tons, down from 28,417 tons for the same period a year ago.

Japan expressed reservations about the limits during yesterdays talks, and urged China to make ample supplies of rare earths available, Nikkei English News reported, citing a briefing by Satoru Sato, press secretary for visiting Foreign Minister Katsuya Okada.

The U.S. Trade Representative is also targeting the restrictions for a potential trade case. The U.S. has asked business groups and labor unions to provide evidence that China is hoarding these elements for a case that might be filed at the World Trade Organization.

China controls 97 percent of production of the materials, known as rare earth elements, giving it market power over the U.S., the Government Accountability Office said in a report in April. China restricts exports of the elements through quotas and export taxes of as much as 25 percent, the GAO said.

Minimize Pollution

In order to protect the environment, China had no choice but to take such measures, Chen said, according to Xinhua. The restriction policy will also have an adverse impact on the Chinese market, where parts for Japanese products are assembled, Chen added.

Chinas policy to restrict its rare earths mining and exports is out of concern for the environment and to minimize pollution, Liu Aisheng, director of the Chinese Society of Rare Earths, said in an interview with Bloomberg News in June. It also encourages the domestic industry to effectively use its own resources and discourages exports of raw materials, such as ore and mixed ore, without much processing.

Rare earths are a group of 17 chemically similar metallic elements, including lanthanum, cerium, neodymium and europium. The U.S. was self-sufficient in the materials until the mid- 1980s, when lower labor and regulatory costs helped Chinas climb to dominance, the U.S. Geological Survey said in a report.

--Feiwen Rong. With reporting by Xiao Yu in Beijing. Editors: Paul Tighe, Jim McDonald

To contact the reporter on this story: Feiwen Rong in Beijing at [email protected]
Last Updated: August 28, 2010 20:59 EDT

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