China Almost Doubles Rare-Earth Export Quota

Quota for the next six months of the year is up 97.3% from the 7,976 tons set for the same period last year.

Amid tensions with trade partners over its grip on the shipments of raw materials, China on July 14 nearly doubled the export quota of rare earths for the second half of the year to 15,738 tons.

The quota for the next six months of the year is up 97.3% from the 7,976 tons set for the same period last year, according to data from the Ministry of Commerce.

China produces more than 95% of the world's rare earths -- 17 elements critical to manufacturing everything from iPods to low-emission cars and missiles.

But Beijing has angered trade partners by restricting overseas shipments of rare earths , in a bid to burnish its green credentials and tighten its grip over the sought-after metals. In December, it slashed the export quota of the metals for the first half of the year to around 14,450 tons, down 35% from the same period in 2010, after cutting the maximum by 72% for the second half of 2009.

The moves have led to a spike in international prices of the elements and triggered mounting complaints from foreign buyers.

The European Union on July 14 criticized the new quota, saying there was actually "no noticeable change in the annual amount of rare earths China will allow to be exported to the EU."

John Clancy, EU trade spokesman, said the new measure now covered iron alloys containing rare earths, which he said resulted in a "tightening of the quota" in practical terms. "This is highly disappointing and the EU continues to encourage the Chinese authorities to revisit their export restrictions policy to ensure there is full, fair, predictable and non-discriminatory access to rare earth supplies."

Last week, the World Trade Organization ruled against China's export restrictions on some other raw materials than the metals.

EU trade commissioner Karel De Gucht -- who met Chinese commerce minister Chen Deming on July 14 to discuss a range of issues including rare earths -- said that China would appeal the decision. "The Chinese made it clear they are going to appeal... but if the appellate body were to confirm this decision they would take measures to live up to it," De Gucht said.

If China were to lose the WTO appeal "they realize this will have an effect on (their rare earths policy) and we have very clearly stated that we prefer to come to a negotiated solution."

The WTO upheld complaints by the United States, the European Union and Mexico that Beijing had restricted exports of industrial raw materials such as bauxite, coke, fluorspar, magnesium and manganese to help its own industries against foreign competitors.

The commerce ministry would not confirm the appeal.

Copyright Agence France-Presse, 2011

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