BEIJING—China has cut its rare earths export quota as it tries to shore up sagging prices for exotic metals used in mobile phones and other high-tech goods.
The country accounts for 97 per cent of rare earth output and its 2009 decision to curb exports while it develops an industry to create products made with them alarmed foreign companies dependent on Chinese supplies.
In its latest quota, the Commerce Ministry said exporters will be allowed to sell 10,546 tons of rare earths in the first half of 2012—a 27 per cent reduction from the quota for the first half of 2011.
China’s export restrictions have strained relations with the U.S., the European Union, Japan and other governments that have called on Beijing to remove its curbs and make target lucid.
Despite production and export curbs, rare earths prices in China have tumbled as U.S. and European economic woes dent demand for its exports. The government ordered its biggest producer to suspend output for a month in October to shore up prices.
But restrictions have made rare earths much more expensive abroad, giving Chinese manufacturers that use them a price advantage and foreign manufacturers an incentive to shift operations to China.
In a sign of unusually weak demand, the Commerce Ministry said actual Chinese exports of rare earths in 2011 totalled 14,750 tons for the first 11 months of 2011—the equivalent of just 49 per cent of the total annual quota.
In another possible move to tighten export control, the ministry said only 11 companies will be allowed to sell abroad—down from 26 companies given licences in 2011.
Rare earths are 17 elements including cerium, dysprosium and lanthanum used to manufacture flat-screen TVs, batteries for electric cars and wind turbines. They are also used in some high-tech weapons.
The U.S., Canada and Australia also have rare earths but stopped mining them in the 1990s as lower-cost Chinese ores flooded the market.
Surging demand has prompted companies in Canada, the U.S., India, Malaysia, Russia and other countries to develop rare earths mines, some of which are expected to start producing by 2015.