China, the biggest supplier of rare earths, will keep 2012 export quotas “basically level” with this year, as high prices and a slowing global economy sap demand.
The full-year quota may be about 31,130 metric tons, according to Bloomberg News calculations based on first-round quota figures given by the Ministry of Commerce in a statement. The quota was 30,184 tons in 2011 and 30,258 tons in 2010.
China produces at least 90 percent of the world’s rare earths, used in Boeing Co. helicopter blades and Toyota Motor Corp. hybrid cars. The slowing global economy and high prices have curtailed demand from Japan, Europe and U.S., prompting speculation the country may slash quotas for 2012. China has curbed output and exports since 2009, when quotas were set at 50,145 tons, to conserve resources and protect the environment.
“The quota has become pointless if export demand falls short of the limits,” said Wei Chishan, a Shanghai-based analyst at SMM Information & Technology Co., a data provider. “Rare-earth users are under great pressure to pass on surging costs, while the global slowdown has slashed demand.”
China, the world’s fastest growing major economy, exported only 14,750 tons of rare earths in the first 11 months of this year, or 49 percent of the full-year limit, “leaving a huge amount of export quota unutilized,” the ministry said.
“It shows supply is sufficient,” SMM’s Wei said.
The government allocated 10,546 tons of first-round export quotas to nine companies, including China Minmetals Corp. and Sinosteel Crop., that have met the government’s environment protection standards, the ministry said. Another 14,358 tons may be granted to 17 other companies, including Baotou Iron & Steel Group, China’s biggest producer, if they meet the standards by the end of July, the statement said.
The first-round quotas will account for about 80 percent of the full-year volume for 2012, the ministry said.
Rare earths are 17 chemically similar elements including neodymium, cerium and lanthanum. The export prices from China for eight rare earths found at the Mount Weld project in Western Australia surged to $193.21 a kilogram on average in the third quarter, compared with $31.35 in 2010, according to figures on Lynas Corp.’s website. The prices have since fallen 41 percent to $113.43 a kilogram on Dec. 19, the company said.
China has set export limits on a range of mining products including silver, minor metals and coke to conserve resources and protect the environment. Raw-material restrictions have stoked tensions between China and its trading partners including the U.S. and the European Union, which said it has unfair commerce and currency policies.
Complaints against China by the U.S., the European Union and Mexico were bolstered by a World Trade Organization ruling, which found in July that quotas, export duties and license requirements on industrial ingredients such as coke, zinc and bauxite violate global rules.
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