China drops Its export limits on rare earths

January 5, 2015

The export quotas on rare earth elements imposed by China have been dropped after China lost a World Trade Organization (WTO) case.
China imposed export limits in 2009. The United States challenged the quotas in 2012 in a WTO complaint that argued that the quota was designed to gain market advantage for Chinese producers. The European Union, Japan and other governments joined the complaint that was upheld by the WTO, The Associated Press reported.

The change was included in the Ministry of Commerce’s trade guidelines for 2015, but there was no separate announcement. Under the new guidelines, rare earths will require an export license but the amount that can be sold abroad will no longer be covered by a quota.

China’s limits, imposed in 2009, prompted concern about supplies for global technology producers. They led to efforts to reopen or develop new mines in the United States and elsewhere, and by Japan and some other countries to recycle rare earths.

China has about 30 percent of global deposits of rare earths but accounts for more than 90 percent of production. It imposed export limits while it tried to build up domestic manufacturers to capture more of the profits that go to Western and Japanese producers of mobile phone batteries and other products.

Beijing cited the need to conserve a dwindling resource and limit environmental damage from mining but imposed no restrictions on the production and use of rare earths by companies within China.

Chinese officials have expressed hope that foreign manufacturers that use rare earths will shift production to China and give technology to local partners.

The United States supplied its own rare earths needs from domestic sources until the late 1990s. Production ended after low-cost Chinese ores flooded global markets.

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