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> Concern as China cuts rare earths quota
> Reuters in Sydney
> 4:37pm, Dec 29, 2010
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> China has raised fresh international trade concerns after slashing
> export quotas on rare earths minerals, risking action from the
> United States at the World Trade Organisation.
> China, which produces about 97 per cent of the global supply of rare
> earth minerals, cut its export quotas by 35 per cent for the first
> half of next year versus a year ago, saying it wanted to preserve
> ample reserves, but warned against basing its total next year export
> quota on the first half figures.
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>
> The US Trade Representative’s office was “very concerned” about
> China’s export restraints on rare earths and had raised its concerns
> with China, a spokeswoman said on Tuesday.
>
> US makers of high-tech products such as Apple iPads, along with
> Japanese companies have been scrambling to secure reliable supplies
> of the minerals outside of China as Beijing steadily reduces export
> allocations.
>
> Japan’s Sony Corporation said China’s move to cut export quotas was
> a hindrance to free trade and that it would work to reduce its
> reliance on Chinese supplies.
>
> “At this point in time there is no direct impact on our company. But
> further restrictions could lead to a shortage of supply or rise in
> costs for related parts and materials,” Sony said in an email
> statement in response to questions from reporters. “We will watch
> the situation carefully.”
>
> Sony, maker of Bravia brand flat TVs, Vaio PCs and the PlayStation 3
> videogame console, will look for ways to cut its use of rare earths,
> including developing alternative materials, Sony spokeswoman Ayano
> Iguchi said.
>
> China’s move, however, came as a shot in the arm for some companies.
>
> Lynas Corporation, which owns the world’s richest known non-Chinese
> deposit of rare earths, jumped over 10 per cent even though it will
> be at least a year before it is capable of mining any material from
> a new lode in Australia.
>
> Other rare earths companies, including China Rare Earth Holding,
> Arafura Resources, Alkane Resources and Greenland Minerals and
> Energy also gained between 8 per cent 10 per cent.
>
> “Export quotas continue to be a tool for the Chinese government to
> limit the export of China’s strategic resource,”
>
> Lynas Executive Chairman Nick Curtis said in a statement.
>
> “The growth in the Chinese domestic market coupled with a decrease
> in production of rare earths in China is a likely cause for the
> tightening of export regulations,” said Curtis, whose company is
> aiming to start production in about a year and has already forged
> supply contracts with Japanese traders.
>
> World demand for rare earths at present is about 110,000 tonnes a
> year, with China accounting for about 75 per cent of total demand
> with the remainder split between Japan, the United States and
> Europe, in descending order.
>
> Demand for rare earths is set to more than double to 250,000 tonnes
> by 2015, according to industry estimates.
>
> “Concerned parties should not estimate full-year quotas for rare
> earth minerals just by looking at the first set of quotas,” China’s
> Ministry of Commerce said.
>
> Final quotas will take into account domestic production and demand
> both at home and abroad, according to the ministry.
>
> Prices have surged for these minerals, also used in making
> fluorescent light bulbs, since authorities in Beijing slashed their
> rare earth exports by 40 per cent this summer, saying China needed
> them for its economic development.
>
> Last week, Hitachi Metals signed a joint venture with US-based
> Molycorp to help ensure a steady supply – an announcement that sent
> its shares up 15 per cent in a single trading session.
>
> That followed word earlier this month that Sumitomo Corporation
> agreed to invest US$130 million in Molycorp to secure a seven-year
> supply of the materials.
>
> Since debuting in late July at US$14, Molycorp’s stock price has
> nearly quadrupled.
>
> Molycorp owns a rare-earth mine in Mountain Pass, California, which
> is scheduled to resume production next year after a 10-year hiatus.
>
> Japan’s trade minister, Akihiro Ohata, told reporters on Tuesday he
> believed Japan would still be able to secure enough rare earth
> supplies next year even after China’s quota cuts, but said the
> situation would need further study.
>
> Ohata’s comment was based on the assumption that the expected amount
> of imports in the first half of next year would be roughly equal to
> the average of imports for the first and second halves of this year,
> a spokeswoman for the ministry said.
>
> Hyundai Mobis, South Korea’s top automotive parts maker and a major
> supplier to Hyundai, said that the quota would have an impact on the
> two companies, as rare earth is used in electric motors for hybrid
> vehicles, and as Hyundai Motor is increasing its hybrid vehicle sales.
>
> A spokesman for Hyundai Mobis added that the two companies have been
> preparing measures to cope with rare earth issues, including
> diversifying imports.
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