China says no significant cut for rare earth quotas

By Zhou Xin and Michael Martina

BEIJING (BestGrowthStock) – China’s rare earth export quotas for 2011 will not be significantly cut from recent levels, a commerce official said on Monday, reinforcing Beijing’s efforts to soothe foreign companies and governments worried about supply.

A Chinese Vice Minister of Commerce, Chen Jian, made the comments at a news conference after weeks of international jitters about whether China could use its chokehold on 97 percent of global rare earths production to sharply reduce exports of the metals, which are used for many high-tech applications.

Chen’s comments came after Vietnam and Japan, a big consumer of rare earths from China, agreed at an Asian regional meeting in Hanoi on Sunday to partner on mining the minerals in Vietnam.

Japan and other countries, including the United States, have said they are seeking to diversify their access to rare earth supplies away from China, following indications that Chinese exports have been disrupted or blocked.

Beijing has repeatedly said it is within its rights to control exports and its foreign customers should not be alarmed.

“I don’t think there will be a big cut in export quotas,” Chen said, when asked whether China would slash rare earth exports next year.

“China has a management system, but China has no embargoes,” he said. “But that does not mean you can buy freely, there will be a quota system — the quota system is a way of management.”

This year, Beijing has slashed export quotas by around 40 percent from 2009 levels, saying it needs to protect reserves from reckless exploitation. It mined about 120,000 metric tons of rare earths in 2008.

China holds about a third of the known, exploitable global reserves of rare earths, but it worries that its supplies will be depleted within decades at current rates of mining.

Chen, the commerce official, repeated the government’s position that its efforts to regulate exports of the metals were fair, and needed for environmental reasons.

“There are many countries and governments in the world, they have rare earth resources, but they don’t allow exploration, let alone exports,” he said.

“China’s rare earth industry is full of problems — excessive exploitation, rampant smuggling and serious environmental pollution,” Chen added. “Don’t you think the Chinese government has to step in and enhance management?”

(Writing by Chris Buckley and Michael Martina; Editing by Daniel Magnowski)

China says no significant cut for rare earth quotas