Baotou, China & REEs.

Baotou, China & REEs.

With much of the west headed off for its Easter break or already on its Easter vacation, China today issued its Inner Mongolia rare earths production quota. There was little surprise that all 25,000 tonnes was allocated to Baotou Steel, parent of Baotou Steel Rare-Earth Hi-Tech, China’s leading producer of rare earth minerals. Presumably, Baotou has now fixed whatever environmental concern had held up the company getting the allocation earlier.

Maybe, but I can’t help but feeling that the timing had something to do with last month’s REE WTO complaint filing by America, the EU and Japan.  In their defence, China will argue that they have allocated roughly one third of their entire production quota for export and that last year not all the export quota was taken up. Sophistry of course, since the real issue is one of the deliberate  two tier REE pricing system that stacks the deck if favour of Chinese manufacturers, including any western companies that care to transfer intellectual property to China to start manufacturing there.

Assuming the complainant’s win which seems likely, I suspect that this REE game of cat and mouse will last until the final appeal at the WTO is over, and an arbitration panel eventually decides if China has made enough changes to have complied. By then the issue may be moot, at least as far as heavy REE exports are concerned, since by mid 2014 China might need all the heavies for the domestic economy.

Oh what a tangled web we weave ….

China issues 25,000 tonnes of rare earths output quota to Baotou
SHANGHAI, April 6 | Thu Apr 5, 2012 10:11pm EDT

(Reuters) – China has issued a rare earths production quota to Inner Mongolia, the local resources ministry said in a statement on Thursday.

The quota, for production of 25,000 tonnes, has been allocated entirely to Baotou Steel Group, according to a statement by the local branch of China’s Ministry of Land Resources.

The group is the parent of Baotou Steel Rare-Earth Hi-Tech , China’s top producer of rare-earth minerals. Both are headquartered in Inner Mongolia.

China has resolved to crack down on illegal private production and streamline its chaotic rare earth sector by encouraging consolidation. It imposed a national output cap of 93,800 tonnes for 2011.

China, which produces about 95 percent of global rare earth supplies, has imposed an export quota of 30,184 tonnes this year, almost flat from last year.
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