China denies new rare earths export quota cuts

17:09 | 20/10/2010

BEIJING, October 20, 2010 - China on Wednesday denied making any fresh cuts in rare earths export quotas, but insisted it reserved the right to restrict shipments, after reports that supply to US companies had been cut off.

The commerce ministry did not specifically comment on reports that Beijing had halted

Rare earths are used in high-tech products ranging from mobile phones to hybrid cars- Picture: AFP

shipments of the minerals, vital for the production of everything from iPods to hybrid cars, to both Japanese and US firms as a retaliatory move.

But it lashed out at a report in the official China Daily, citing an unnamed official from the same ministry, that Beijing would cut quotas by up to 30 percent next year to prevent over-exploitation.

"Reports published by individual media that China will continue to cut rare earth export quotas for next year are groundless and purely wrong," the ministry said in a statement faxed to AFP.

"China will continue to supply the world with rare earths," it said.

"Meanwhile, in order to protect exhaustible resources and sustainable development, China will also continue to impose restrictions on rare earths mining, production and export."

The commerce ministry said such measures did not contravene World Trade Organisation rules.

Rare earths -- a group of 17 elements -- are used in high-tech products ranging from flat-screen televisions to lasers to hybrid cars, and China controls more than 95 percent of the global market.

China has cut rare earth exports by five to 10 per cent a year since 2006 as demand and prices soar.

In 2011, the government will set "reasonable" export quotas "based on a comprehensive study of rare earths output, domestic and overseas demand and needs for sustainable development," the ministry said.

Tokyo has accused China of restricting rare earths shipments to Japanese firms, amid a bitter spat between Asia's top two economies sparked by a maritime incident in disputed waters six weeks ago.

Beijing has previously denied any embargo, but a Japanese trade ministry survey released this month found that all 31 Japanese companies handling rare earths had reported disruption to shipments.

On Tuesday, the New York Times reported that China had halted some rare earths shipments to the United States in response to a US probe into alleged Chinese subsidies for its green technology sector.

"The embargo is expanding" beyond Japan, the newspaper quoted an anonymous industry official as saying.

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