China To Continue To Trim Rare-Earth Export Quotas

China has set a preliminary rare-earths export quota of 14,446 tonnes for 2011, according to the Commerce ministry. The preliminary quota is a sighter for the industry covering roughly the first half of the year. State media announced that as an 11.4% year-on-year cut in comparison to the preliminary quota for 2010, but unofficial comparisons with last year’s numbers put the reduction at closer to 35%-39%.

The full year quota for this year is 30,300 tonnes, 40% down from 2009 as Beijing pursues a policy of cutting back rare-earth exports to husband its resources. That quota was exceeded by September, with exports in the first nine months of the year reaching 32,200 tonnes, despite supply interruptions reported in the second half of this year that sent manufacturers who depend on the minerals to produce an array of high-tech goods from consumer electronics to weapons into a flap over suspicions that Beijing was using its current market dominance for noncommercial purposes. China said in July that it would cut exports in the second half to supply its own electronics industry. Quotas were cut by 72% for the second half and prices surged.

Beijing is also to set up an industry association to conduct price negotiations with foreign buyers (and keep domestic miners, whose operations cause great environmental damage, under a tighter official thumb), much as happens in the steel industry. The new association will fall under the Ministry of Industry and Information Technology. (Update:  Caijing reports that new environmental protection standards and possibly new taxes are to be imposed on the industry in 2011.)

Meanwhile, as we noted before, the day is fast approaching when rare earths are rare no more. Production is being ramped up in North America, Australia, India, South Africa and Brazil as mines that once looked uneconomic get reopened or expanded. That China has an monopoly that cannot be defended for too much longer is a reason that it is likely to dodge a WTO challenge over its rare-earth exports.

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