China Protecting Strategic Interests With Rare Earths Policy

Oct. 26, 2010
U.S. plans to raise the issue during November's G20 Summit.

China's restrictions on exports of rare earths are aimed at maximizing profit, strengthening its homegrown high-tech companies and forcing other nations to help sustain global supply, experts say.

The world's top consumers of rare earths, especially Asian neighbor Japan, have rung the alarm bell in recent weeks, accusing China of disrupting exports of the vital minerals -- a charge Beijing has repeatedly denied.

Shipments have nevertheless been disrupted, and a top official in Tokyo has warned that Japan's stockpile could run out by March. Japan and Vietnam are now set to sign a deal on joint development of rare earth reserves.

Germany meanwhile said it will work with Tokyo to stimulate rare earths production in other nations including Mongolia, Namibia and the United States. Washington said it would raise the issue at next month's Group of 20 summit.

A commonly-held view among officials in Beijing is that rare earth policies in the past were like "selling gold to foreigners at the price of Chinese radishes," Damien Ma, an analyst at Eurasia Group, wrote in a research note.

China last year produced 97% of the global supply of rare earths -- a group of 17 elements used in high-tech products ranging from flat-screen televisions to iPods to hybrid cars -- but is home to just a third of reserves.

The United States and Australia have large reserves, 15% and 5% respectively, but stopped mining them because of cheaper Chinese competition and domestic environmental concerns.

"China is saying they're not interested in supplying the world's rare earths indefinitely," Geoff Bedford, vice-president of Canada-listed Neo Technologies -- a rare earth processor operating in China -- told AFP at an industry conference on the southeastern island of Xiamen. "So they're showing signs of cutting back and they're expecting other mines to come in."

China's commerce ministry has said it reserves the right to slash rare earths exports again to "protect exhaustible resources and sustainable development" in an industry that is notoriously chaotic, with illegal mining rampant, and highly polluting.

"Over the past few years, rare earths exploration has been very messy and the environment has been very damaged," Jiang Fan, vice director-general of the ministry's foreign trade department, told AFP.

"The decrease of rare earths is not good for the world. I hope other countries can understand what China is doing."

Copyright Agence France-Presse

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