China cuts 'rare earth' quota 11%

Asian power supplies 97% of world supply

China said Tuesday it is reducing the amount of rare earths it will export next year by more than 10 per cent — likely to be an unpopular move worldwide since the minerals are vital to the manufacture of high-tech products.China accounts for 97 per cent of the global production of rare earth minerals, which are essential to devices as varied as cellphones, computer drives and hybrid cars. Countries were alarmed when Beijing blocked shipments of the minerals to Japan earlier this year amid a debate over disputed islands.

Concerns about China's grip on rare earths has led countries on a hunt for alternative sources. A number of companies in North America — notably Molycorp Inc. in the U.S. and Thompson Creek Metals Co. in Canada — are hurrying to open or reopen rare earth mines. Two Australian companies are also preparing to mine rare earths. Numbers released Tuesday by China's Commerce Ministry show export quotas of the rare minerals will be down 11 per cent next year as compared to the same period this year. China usually issues a second batch of quotas during the year, and it is not known how the figures will change later in 2011.

The new numbers say China is allocating 13,105 metric tons of rare earths among 31 companies. China allocated 14,790 metric tons among 22 companies in the first batch of quotas this year.China has been reducing export quotas of rare earths over the past several years to cope with growing demand at home. A Commerce Ministry spokesman has also said that China is cutting its exploration, production and exports out of environmental concerns.

Earlier this month, state media reported that China plans to raise duties on some rare earth exports starting next year, but it did not say which minerals would be affected or how much the tax would be.A state media report Tuesday said China is preparing to set up a rare earths association that would include nearly all of the country's leading rare earth companies, and could help them to co-ordinate their negotiating positions. The report posted on the Sina Corp. portal said the association should be set up in May.The United States last week threatened to go to the World Trade Organization with its concerns over China and rare earths. When asked for comment during a regular press briefing Tuesday, China Foreign Ministry spokeswoman Jiang Yu declined to answer.

But China has had to address the global concerns numerous times since the spat with Japan."China is not using rare earth as a bargaining chip," Wen Jiabao, China's top economic official, told a China-European Union business summit in Brussels in October.

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