China considering rare earths strategic reserves: report

November 03, 2010 | 14:40
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China is considering setting up strategic reserves of 10 minor metals including rare earths, state media said Wednesday, as Beijing moves to tighten control of its supply of the vital minerals.

The report comes amid concerns in Japan and the United States that China, which controls more than 95 percent of the global market in rare earths -- used in everything from iPods to missiles -- is clamping down on exports.

The strategic reserve plan would include rare earths, tungsten, antimony, molybdenum, tin, indium, germanium, gallium, tantalum and zirconium, the Shanghai Securities News said, citing unnamed sources.

Some metals like rare earths and tungsten have long been undervalued on the global market due to the low cost of complying with environmental standards in China, and a reserve would help Beijing manage supply and demand, it said.

China has cut rare-earth exports by five to 10 percent a year since 2006 as demand and prices soar, in a measure it says is aimed at minimising the harmful environmental effects of mining for the minerals.

A spokesman for China's commerce ministry said Tuesday that Beijing would further cut its export quotas for rare earth metals next year "but not by a very large margin".

But high-tech firms in Japan and the United States say China is deliberately withholding shipments of the minerals -- reportedly over a territorial row with Tokyo and a trade dispute with Washington.

Beijing has repeatedly denied such a move, and said last week that it would not use its near-global monopoly on the rare earths trade as a "bargaining tool".

A Japanese trade ministry survey released last month found that all 31 Japanese companies handling rare earths had reported disruption to shipments.

The official China Securities Journal said Wednesday China would trim export quotas for minor metals by an average of two to three percent each year and cuts for rare earths would likely to be larger than other metals.

"The export quotas for minor metals are unlikely to rebound in future," the newspaper quoted an industry insider who was helping draft the policy as saying.

Rare earths -- a group of 17 elements -- are metals used in high-tech products ranging from flat-screen televisions to lasers and hybrid cars.

China's restrictions on rare earths have become a defence issue in the United States and other countries because the minerals are key components in items such as missiles, radar systems, jet engines and night-vision goggles.

US Secretary of State Hillary Clinton said last week in Hanoi that she had received "assurances" from her Chinese counterpart Yang Jiechi that Beijing had "no intention of withholding these minerals" from the world market.

AFP

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