Beijing hits back over rare earths
Beijing stepped up its rebuttal of accusations that it broke global trade rules by restricting exports of key industrial materials known as rare earths, amid an ongoing trade dispute with the United States, the European Union and Japan.
It also provided its own estimate for the mainland's rare earths reserves for the first time in an industry development white paper published by the State Council, or China's cabinet, yesterday.
'China's restriction on mining of rare earths is aimed at protecting its environment and resources, which is in compliance with global trade rules,' Gao Yunhu, deputy director of the Ministry of Industry and Information Technology's rare earths office, said in Beijing.
The paper said the mainland had an estimated 18.59 million tonnes, or 23 per cent of the world's rare earth resources, compared to the United States Geological Survey's (USGS) estimate of 36 million tonnes, or 36 per cent of the global total.
Office director Jia Yinsong said the USGS did not disclose the source of its data in its estimate of the mainland's resources, which raised questions about the data's comprehensiveness.
The estimate in the white paper was backed by Ministry of Land and Resources' surveys, Jia said.
Fan Guohe, a Shanghai-based analyst at Phillip Securities, said the ministry's data might be more reliable since the US data might not be supported by data collection in the field.
The US, EU and Japan complained to the World Trade Organisation in March, alleging Beijing restricted free trade by imposing export quotas on rare earths, a group of 17 chemical elements that are relatively abundant but not often found in high enough concentrations to justify exploitation.
The dispute over rare earths has made media headlines partly because China's export restriction is seen as a bargaining chip against Japan and the US on political issues, and because rare earths are increasingly used in hi-tech electronic appliances like mobile phones and flat-screen televisions, and clean energy products like wind turbines and electric car batteries.
Despite the sharp price gains in 2009 and 2010, the paper said average prices of rare earths only rose by 2.5 times between 2000 and 2010, compared to 4.4 times for gold, 4.1 times for copper and 4.8 times for iron ore.
This was because rare earth prices fell precipitously between 2000 and 2005 due to overexploitation and lax environmental regulation on the mainland, it added.
Analysts said the trade dispute would take years to resolve and by then large-scale overseas mines would be re-opened or built to address global tight supply, which saw prices soar 1.2 to 14-fold in 2010. China cut export quotas from 65,609 tonnes in 2005 to 30,184 tonnes last year.
It also imposed a moratorium on issuing new mining licences between 2009 and 2015, as it drives consolidation of the fragmented sector, remedies wasteful mining practices and tightens implementation of environmental protection rules.