Rare Earth Global Demand. (thesantosrepublic.com)

China vehemently denied Wednesday that it has halted export of rare earth materials amid news reports that Beijing started blocking shipments of the crucial minerals to the United States and Europe following similar measures against Japan.

“China will continue to provide rare earth to the rest of the world,” the ministry of commerce said in a statement faxed to CNN. “At the same time, to protect exhaustible resources and achieve sustainable development, China will also continue to implement restrictive measures on the mining, production and export of rare earth.”

The New York Times, citing anonymous industry sources, earlier reported that Chinese customs officials had imposed broader export restrictions Monday morning.

China Daily, the country’s official English-language newspaper, quoted an unnamed official as saying the government would cut export quotas by as much as 30 percent in 2011.

“Reports by some media outlets that China will continue to reduce export quotas of rare earth next year are completely baseless and wrong,” the commerce ministry said. “The Chinese government will set reasonable export quotas for 2011, taking into consideration the production output, domestic and international demands, and the need for sustainable development.”

China holds about a third of the world’s rare earth deposits but accounts for 95 percent of the global output.

Rare Earth Global Demand

The materials are vital in manufacturing a wide range of products — both civilian and military — from mobile phones, hybrid cars to guided missiles.

Beijing’s critics see China use its monopoly on the minerals as a weapon in trade or political disputes.

China reportedly stopped rare earth shipments to Japan, the world’s largest rare earth importer, after Japanese coast guards detained a Chinese trawler captain near an island claimed by both nations.

The New York Times said the expanding embargo came after the U.S. government decided Friday to investigate claims that China had been illegally subsidizing its clean energy exports.

A spokeswoman for the Office of the U.S. Trade Representative told CNN that the agency is looking into the matter. U.S. Congressman Sander Levin, chairman of the House’s Ways and Means Committee, called on the Obama administration to “immediately challenge these actions as World Trade Organization-inconsistent” if the report is proven to be true.

The Chinese commerce ministry said in its statement to CNN that the country’s export controls on rare earth are not against WTO rules, and some analysts say Beijing’s motives are more commercial than political.

“They are the largest consumer of the metals in the world and are really moving into high tech,” said Martin Hennecke, an associate director at Hong Kong-based consulting firm Tyche Group.

“They want to secure their own supply, because China is consuming 60 percent of those metals there.”

China insists that its recent restrictions on rare earth are long overdue, as unregulated mining in the country had been causing great environmental damage and depleting its own resources.

Developed countries that hold sizable deposits of rare earth, including the United States, have mostly ceased production because of high labor costs and tight environmental regulations. The controversies over China’s moves on the materials have prompted calls in the United States to resume domestic production, with the House of Representative passing a bill aimed at re-developing the industry.

Hennecke said such programs will take time, not to mention that reasons to move production to China in the first place still remain.

More on: CNN


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