China consolidates rare earths


April 11, 2012 (Source: Brisbane Times) — China has created an industry group to co-ordinate its rare earths sector, amid a growing trade war over its export restrictions on the resources.

China accounts for about 95 per cent of global output of the 17 rare earth materials, substances used in the manufacture of a wide range of technology products, including mobile phones, DVDs and hybrid cars.

The US, Europe and Japan have accused China of unfairly limiting exports of the resources, and last month lodged a formal complaint with the World Trade Organisation.

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Beijing has now established a rare earths industry association to consolidate the sector, promote international exchanges and help its 155 members deal with trade disputes. The association will report to the Ministry of Industry and Information Technology, which regulates production.

Su Bo, an industry vice-minister, said the Chinese government wanted to phase out small smelters, give bigger companies greater stakes and improve environmental policies.

”China will continue to clean up the rare earth industry, expand rare earth environmental controls, strengthen environmental checks and implement stricter rare earth environmental policies,” he said.

The international trade dispute centres on Beijing’s imposition of export quotas for rare earths and an effective tax rate of 42 per cent on the exports.

Critics argue that the policies give Chinese companies an unfair competitive advantage by keeping domestic prices far lower than those faced by international companies.

”China’s restrictions on rare earths and other products violate international trade rules and must be removed,” EU trade commissioner Karel De Gucht said.

”These measures hurt our producers and consumers … including manufacturers of pioneering high-tech and green business applications.”

China argues that the export controls are justified by the need to limit environmental damage and conserve its resources. It also highlighted the fact that its rare earths export quota for 2011 was not used up.

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