Thursday, April 3, 2014

China’s Grip on Rare Earths Seen Tightening by Antaike

China will seek to strengthen its control of rare earths exports, even after the World Trade Organization ruled against its curbs, said an analyst at Beijing Antaike Information Development Co.

“It’s perfectly legitimate and fairly easy for China to introduce policies in the domestic mining, refining and trading industries that ultimately have the same effect as export controls,” said Chen Huan, an analyst at Antaike, which is a research unit of the state-backed China Nonferrous Metals Industry Association.

China, which accounts for 90 percent of global rare earths production, could increase mining taxes and export license fees, build up strategic reserves and impose stricter environmental guidelines for producers, Chen said yesterday.

A dispute-settlement panel at the Geneva-based WTO on March 26 sided with the U.S., Japan and Europe in determining that China didn’t adequately justify imposing export duties and quotas. China cut mining permits and imposed production and export quotas in 2007 to reduce pollution and conserve supplies.

China is trying to promote six companies including Baogang Group and Aluminum Corp. of China to lead consolidation and acquisitions in rare earths, according to Peng Bo, an analyst at Huachuang Securities Brokerage Co.

It’s also bringing exchange trading to rare earths, the group of 17 chemically similar elements used in products from smart phones to guided missiles.
Exchange Trading

Baotou Rare Earth Products Exchange in Inner Mongolia province began trading of europium oxide, praseodymium-neodymium oxide and cerium oxide on March 28. Since its debut, europium oxide has advanced 4.6 percent to 4,184 yuan ($674) a kilogram as of 1:35 p.m. local time today. Praseodymium-neodymium oxide has climbed 2.8 percent to 329 yuan and cerium oxide has increased 2.4 percent to 19.96 yuan, according to the Baotou bourse.

China typically releases two export quota batches every year. Falling demand in a weak global economy left 8,599 metric tons of rare earths export quotas unused at the end of 2013, said Chen, citing trade data tracked by Antaike.

The Association of China Rare Earth Industry will study details of the WTO report and evaluate its impact, Chen Zhanheng, a deputy general secretary at the association, said last month.

To contact Bloomberg News staff for this story: Feiwen Rong in Beijing at frong2@bloomberg.net

To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net Sungwoo Park

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