China's grip on rare earths supply loosens as more overseas mines start

The mainland's share of global rare earths supply could fall to as low as 65 per cent next year from 90 per cent in 2011 as more overseas projects come on stream and domestic illegal mining is tackled, according to state-owned China Minmetals.

Beijing has come under fire over recent years for export curbs on the minerals, which are used in a range of high-technology products.

Wang Qionghui, an assistant president at Minmetals, a state-owned mining and trading major that is one of six firms leading the fragmented industry's consolidation, told the China Mining conference the mainland's supply was increasingly constrained by tighter enforcement of illegal mining. "In recent years, legal output volumes have grown modestly … but with strengthened control on illegal activities, the actual supply will gradually fall," he said.

Legal output has been controlled at about 9.3 million tonnes between 2011 and last year, while export quotas were set at just above 30,000 tonnes, according to Wang.

In August, the World Trade Organisation upheld a March ruling that China's restrictions on rare earths exports violated global trade rules. A Shanghai-based analyst yesterday said it was up to importing countries to take any action against Beijing over the quota, adding that she was unaware of any such moves.

This year's authorised production is projected to rise 12 per cent to 10.5 million tonnes, but the export quotas remain roughly the same. Illegal output was estimated by industry executives to exceed 40,000 tonnes in 2012, Xinhua reported last year.

Illegal mining is especially prevalent in southern China, as the resource can be extracted without sophisticated equipment, while small-scale mining over a large number of locations made enforcement against it difficult.