China cuts export quotas for rare-earth minerals

BEIJING - China said Tuesday that it will cut its export quotas for rare-earth minerals by more than 11 percent in the first half of 2011, further shrinking supplies of metals needed to make a range of high-tech products.

China produces about 97 percent of rare-earth minerals, which are used worldwide in high-technology, clean-energy and other products that exploit their special properties for magnetism, luminescence and strength.

The move comes on the heels of a 40 percent slash in the export quota on such minerals in 2010. The export restraints have inflamed trade ties with the United States, European Union and Japan in particular.

In Washington, the Office of the U.S. Trade Representative said it was "very concerned" by the latest cuts. "We have raised our concerns with China, and we are continuing to work closely on the issue with stakeholders," a spokeswoman said.

Last week, the office said China had refused U.S. requests to end export restraints on rare-earth minerals, and that the United States could complain to the World Trade Organization, which judges international trade disputes.

Chinese President Hu Jintao is due to visit the United States next month for talks with President Obama that both sides hope can stabilize the vital relationship.

The Beijing government said its curbs are for environmental reasons and to guarantee supplies to Chinese clean-energy firms it is trying to promote internationally. But it has also said its dominance as a producer should give it more control over global prices.

China's Commerce Ministry allotted 14,446 tons of quotas to 31 companies, which was 11.4 percent less than the 16,304 tons it allocated to 22 companies in the first half of 2010 quotas a year ago.

Wind turbines and hybrid cars are among the biggest users of rare-earth minerals, which analysts say are facing a global supply crunch as demand swells. The minerals are also used in some weapons systems.

This little-known class of 17 related elements is also used for a vast array of electronic devices.

While industrial users of the minerals in industrialized countries face tighter supplies and higher prices, China's export curbs have created opportunities to open mines or revive dormant production in Canada, Australia and the United States.

Japan has been hard hit by the export curbs. Japanese imports of rare earths shrank further in November, reflecting the impact from China's de facto ban on shipments of the minerals that was lifted late last month.

The European Union has also expressed concern over China's limiting of rare-earth exports, though the bloc's trade commissioner said earlier this month China had reiterated that rare earth supplies would be sustained.