China on Wednesday defended its export curbs on rare earths
used in high-tech products as an environmental measure and rejected a World
Trade Organization challenge by the United States, Europe, and Japan.
A Cabinet official rejected complaints Beijing is using the environment as an excuse
to support fledgling Chinese producers of lightweight magnets and other rare
earths products by limiting supplies to foreign rivals in violation of its
“The protection of the environment is never a pretext
for gaining advantage or increasing economic returns,” said Su Bo, a
deputy industry minister, at a news conference.
has about 30% of rare earths deposits but accounts for more than 90% of
alarmed global manufacturers by imposing export quotas in 2009. It is trying to
build up domestic manufacturers to capture more of the profits that now go to U.S., Japanese
and European companies that transform rare earths into mobile phone batteries,
camera lenses, and other products.
EU, and Japan filed WTO
complaints in March accusing Beijing
of violating its commitments to the global free-trade body. They say export
limits push up rare earths prices abroad and give buyers in China an unfair
Officials held talks April 25-26 in the first step of the
WTO dispute-resolution process, said another official, Gao Yun, deputy
director-general of the industry ministry’s rare earths office. Gao gave no
details of the talks.
If no resolution is reached after 60 days, the dispute can
be sent to a WTO panel for a ruling. Depending on the outcome, sanctions
“All these measures fully conform to WTO rules,”
Gao said. He said Beijing
wants a quick resolution but said it will “actively use world trade
rules” to protect its companies.
The dispute reflects the clash between Beijing’s
free-trade pledges and its ambitions to transform China from a low-wage factory into
a creator of profitable technology by building up and protecting fledgling
Rare earths are 17 minerals used to make goods including
hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapor lights and
has announced an export quota of 10,546 tons of rare earths for the first half
of this year. That is down 27% from the quota for the same period last year.
The government says last year’s total exports were 18,600
tons, just 60% of the 30,000-ton quota, due in part to slack global demand.
The United States,
Canada, Australia, and
other countries also have rare earths but most mining stopped in the 1990s as
lower-cost Chinese ores came on the market.
Beijing’s decision to limit
exports has prompted foreign producers to announce plans to reopen or develop
mines in California, Canada, India,
On Tuesday, Australian miner Lynas Corp. announced it hopes
to start up a rare earths processing plant in Malaysia after a parliamentary
panel ruled it is safe. The facility in the northern state of Pahang has faced
opposition from residents on environmental grounds.
Su said Beijing
hopes other countries “take their fair share of responsibility” for
ensuring supplies by encouraging development of rare earths mines.
Beijing also hopes the export
controls will encourage foreign rare earths companies to shift operations to China,
providing investment and technology. Su said 38 U.S., Japanese and other companies
have set up joint ventures or wholly-owned entities in
and he appealed for more foreign investment in environmental protection and
Besides export quotas, Beijing
has further tightened controls by limiting the number of companies licensed to
Chinese controls have helped to push global rare earths
prices far above what buyers in China
pay. One mineral, terbium oxide, cost $2,000 per kilogram on world markets this
week and $975 in China,
according to Lynas. Another, dysprosium oxide, cost $1,030 per kilogram abroad
and $660 in China.
Last October, a state-owned company that is China’s biggest
rare earths announced a one-month suspension of production in an effort to
shore up slumping prices.
Despite such measures, Su insisted the government has never
tried to manipulate prices.
“The price of an international product such as rare earths
is determined purely by supply and demand,” he said.
Source: Associated Press