China makes deeper export cuts of rare earth metals

The supply of rare earth metals, in which, China has a stranglehold, will become even rarer after Beijing yesterday announced deeper export cuts - a move that not only will send prices soaring for many electronic consumer goods and high-end defence equipment, but multiple complaints to the World Trade Organisation (WTO).

China, which produces 97 per cent of rare earths and accounts for nearly 95 per cent of world supplies, yesterday cut its export quotas by 35 per cent for the first half of 2011.

The Chinese commerce ministry set an export quota of 14,446 metric tonnes for the first half of 2011 to be split among 31 domestic and foreign-invested companies.

The latest quota for the first half of 2011, which the Chinese government has of late started to issue twice every year, is less than the 22,282 tonnes set for the first half of 2010 but higher than the 7,976 tonnes set for the second half of 2010.

The latest cut will put a squeeze on the global market for rare earths, a group of 17 ­elements that are critical in making 21st-century products from smartphones to electric vehicles, to wind turbines and guided missiles among many others.

China has been slowly cutting export quotas of rare earth metals since 2006, but started making deep cuts since the second half of 2009. It has also recently used it as a political weapon to settle territorial disputes with Japan by unofficially banning exports of rare earth to the country from September to November this year.