The world's biggest economies are joining forces to oppose China's limits of exports of rare-earth metals and other key minerals as the risk of a global shortage increases.
The United States, the 27-country European Union and Japan filed a complaint with the World Trade Organization on Tuesday against China's export restrictions and duties on metals including 17 rare-earth minerals, which are used in electronics and high-tech products and are valued for their properties of magnetism, luminescence and strength.
China, the world's fastest-growing major economy, has about one-third of the planet's deposits of rare earths, yet controls more than 90 per cent of global production. It has been reducing shipments abroad to keep more of the metals and minerals for its own manufacturers, leading to shrinking supplies and soaring prices worldwide.
China began dominating the industry in the 1990s by expanding output and driving prices so low that Western countries shut their own mines.
“American manufacturers need to have access to rare earth materials – which China supplies,” U.S. President Barack Obama said in a speech in Washington on Tuesday.
“If China would simply let the market work on its own, we'd have no objections. But their policies currently are preventing that from happening. And they go against the very rules that China agreed to follow.”
The U.S., EU and Japan requested a consultation with China at the WTO, a first step in resolving the dispute. If they can't reach an agreement within 60 days, they can ask a WTO panel to rule on the issue. The World Trade Organization has previously supported U.S. and EU claims that Chinese policies about various minerals violate international trade rules.
Miao Wei, the Chinese minister of industry, told the country's official Xinhua news agency that the government's policy on rare-earth exports is based on developing resources and limiting environmental damage. Some of the metals would be depleted after 20 years if China didn't stop excessive mining, Xinhua quoted Mr. Miao as saying. The export restrictions aren't aimed at any specific country, he added.
“China's restrictions on rare earths and other products violate international trade rules and must be removed,” EU Trade Commissioner Karel De Gucht said in a statement on Tuesday. “These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and ‘green' business applications.”
Canada shares the concerns of the United States, Japan and the EU, a spokeswoman for the Department of Foreign Affairs and International Trade said. China's export policy on rare earths and other metals should provide for predictable and stable supply, in which foreign and Chinese firms are treated equally, the department said.
Ernst & Young said in a report last year that China could soon become a net importer of some rare earths, further straining global supplies. The overall market could swell from between $2-billion (U.S.) and $3-billion, to as much as $6-billion by the middle of the decade, the report said.
China's policy on rare earths attracted attention in July, 2010, after the country moved to cut production and exports. A few months later, it disrupted shipments of the metals to Japan, amid a dispute between the two countries about ownership of a chain of islands.
Shares of rare-earth companies rose around the world on Tuesday. Lynas Corp., which is developing a mine in Malaysia, rose 3.9 per cent in Sydney. China Rare Earth Holdings Ltd. jumped 9 per cent in Hong Kong. Molycorp Inc. , which operates a mine in California, gained 3.2 per cent in New York. Rare Element Resources Ltd. , which aims to develop a mine in Wyoming, climbed 7.2 per cent in Toronto.Report Typo/Error
Follow us on Twitter: