China Clarifies REE Exports

China’s quotas are sufficient to meet global demand and any pressure on the country to export more will not benefit buyers, Wang said. She said China’s crackdown on illegal exploration for the valuable minerals and other measures the country has taken to regulate the industry have not reduced the supply of rare earths to the global market.

Today China Daily, the widely read English language semi-official, online media carries an article clarifying China’s rare earths export policy. 2012 REE exports will be about the same as 2011s, and anyway China’s export taxes and export regime aren’t distorting the market nor restricting western access to REEs.  My guess is that the article is intended to be read in Japan and South Korea, as both an invitation to come in and treat, and as a pre-emptive defence of China’s export regime to head off any western complaint to the World Trade Organisation.

Rare earth exports ‘to rise slightly’
Updated: 2012-02-28 08:08 By Zhou Yan (China Daily)
BEIJING – China is likely to export more rare earths this year as the demand for them increases amid a decrease in their price and as the country maintains the export quotas, according to a former official in the industry.

Wang Caifeng, who was in charge of the rare earths industry at the Ministry of Industry and Information Technology, said on Monday that China, the biggest supplier of the minerals, which are used in much advanced technology, has no intent this year to greatly change the quotas on exports. In 2012, no more than 31,130 metric tons of rare earths are to be exported, only slightly more than in 2011.

In December, the Ministry of Commerce allocated the first round of 2012 export quotas for rare earths, giving nine companies that have export licenses the right to export 10,456 metric tons of the elements. It plans to grant other companies that have yet to obtain such licenses the right to export a further 14,358 tons of rare earths.

Those two rounds will account for about 80 percent of the rare earths export quotas to be given out this year.

—- Export quotas for rare earths have been used to prevent smuggling and illegal exploration in the ill-regulated industry. More importantly, the quotas allow more rare earths to be exported than are sought by global demand, meaning that they do not hamper the market at all, said an official with the Chinese Rare Earth Society who declined to be named.

The official said China will not lift the export quotas in the short term, especially since environmental issues and illegal exploration must be dealt with.

The article is quite long, and follows a more speculative article recently carried in western media based on a Bloomberg article. Basically, China is just restating its previous position, albeit with an invitation to Japanese firms to come in and buy. Last week’s China – Japan spat over the denial of the wartime massacre at Nanking is apparently not going to be escalated to impact trade. It is not of the same importance as to who owns the disputed Senkaku Islands, and the likely reserves of natural gas they sit on top of.

What Are the Implications of China’s Clarification on REE Exports and Tightening the REE Noose?

China’s clarification on REE exports and tightening the REE noose has global implications. As the leading producer of chinese rare earth elements, China’s move could disrupt supply chains for technologies like electric vehicles and renewable energy. This highlights the importance of diversifying rare earth element sources.

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