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    China Limits Exports of Rare Earth Materials

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    cr7 best
    China has become the world's leading producer and exporter of rare earth metals, accounting for 97% of global production in 2010. In that year, China imposed export quotas on rare earth metals, limiting exports to 30,000 tons, which dramatically increased prices outside of China. While China cited environmental reasons, observers believe the quotas were intended to advantage Chinese manufacturers and encourage foreign companies to produce in China. In response, companies have redesigned products to reduce rare earth usage and governments have encouraged private mining of rare earths outside China, reducing its global share to 80% by 2014.

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    China Limits Exports of Rare Earth Materials

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    cr7 best
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    China has become the world's leading producer and exporter of rare earth metals, accounting for 97% of global production in 2010. In that year, China imposed export quotas on rare earth metals, limiting exports to 30,000 tons, which dramatically increased prices outside of China. While China cited environmental reasons, observers believe the quotas were intended to advantage Chinese manufacturers and encourage foreign companies to produce in China. In response, companies have redesigned products to reduce rare earth usage and governments have encouraged private mining of rare earths outside China, reducing its global share to 80% by 2014.

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    China has become the world's leading producer and exporter of rare earth metals, accounting for 97% of global production in 2010. In that year, China imposed export quotas on rare earth metals, limiting exports to 30,000 tons, which dramatically increased prices outside of China. While China cited environmental reasons, observers believe the quotas were intended to advantage Chinese manufacturers and encourage foreign companies to produce in China. In response, companies have redesigned products to reduce rare earth usage and governments have encouraged private mining of rare earths outside China, reducing its global share to 80% by 2014.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    68 views1 page

    China Limits Exports of Rare Earth Materials

    Uploaded by

    cr7 best
    China has become the world's leading producer and exporter of rare earth metals, accounting for 97% of global production in 2010. In that year, China imposed export quotas on rare earth metals, limiting exports to 30,000 tons, which dramatically increased prices outside of China. While China cited environmental reasons, observers believe the quotas were intended to advantage Chinese manufacturers and encourage foreign companies to produce in China. In response, companies have redesigned products to reduce rare earth usage and governments have encouraged private mining of rare earths outside China, reducing its global share to 80% by 2014.

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    China Limits Exports of Rare Earth Materials 

    Rare earth metals are a set of 17 chemical elements in the periodic table and include scandium, yttrium, cerium, and
    lanthanum. Small concentrations of these metals are a crucial ingredient in the manufacture of a wide range of high-
    technology products, including wind turbines, iPhones, industrial magnets, and the batteries used in hybrid cars.
    Extracting rare earth metals can be a dirty process due to the toxic acids that are used during the refining process. As
    a consequence, strict environmental regulations have made it extremely expensive to extract and refine rare earth
    metals in many countries.
    Environmental restrictions in countries such as Australia, Canada, and the United States have opened the way for
    China to become the world's leading producer and exporter of rare earth metals. In 1990, China accounted for 27
    percent of global rare earth production. By 2010, this figure had surged to 97 percent. In 2010, China sent shock
    waves through the high-tech manufacturing community when it imposed tight quotas on the exports of rare earths. In
    2009, it exported around 50,000 tons of rare earths. The 2010 quota limited exports to 30,000 tons. The quota
    remained in effect for 2011 and was increased marginally to around 31,000 tons in 2012 and 2013.
    The reason offered by China for imposing the export quota is that several of its own mining companies didn't meet
    environmental standards and had to be shut down. The effect, however, was to dramatically increase prices for rare
    earth metals outside of China, putting foreign manufacturers at a cost disadvantage. Many observers quickly
    concluded that the imposition of export quotas was an attempt by China to give its domestic manufacturers a cost
    advantage and to encourage foreign manufacturers to move more production to China so that they could get access
    to lower-cost supplies of rare earths. As news magazine The Economist concluded, “Slashing their exports of rare
    earth metals has little to do with dwindling supplies or environmental concerns. It's all about moving Chinese
    manufacturers up the supply chain, so they can sell valuable finished goods to the world rather than lowly raw
    materials.” In other words, China may have been using trade policy to support its industrial policy.

    Developed countries cried foul, claiming that the export quotas violate China's obligations under World Trade
    Organization rules. In July 2012, the WTO responded by launching its own investigation. Commenting on the
    investigation, a U.S. administration official said that the export quotas were part of a “deeply rooted industrial policy
    aimed at providing substantial competitive advantages for Chinese manufacturers at the expense of non-Chinese
    manufacturers.”

    In the meantime, the world is not sitting still. In response to the high prices for rare earth metals, many companies
    have been redesigning their products to use substitute materials. Toyota, Renault, and Tesla, for example—all major
    automotive consumers of rare earth products—have stated that they plan to stop using parts that have rare earth
    elements in their cars. Governments have also tried to encourage private mining companies to expand their
    production of rare earth metals. By 2012, there were some 350 rare earth mine projects under development outside
    of China and India. An example, Molycorp, a U.S. mining company, is quickly boosting its rare earth production at a
    California mine. As a consequence of such actions, by early 2014, China's share of rare earth output had slipped to
    80 percent. This did not stop China from announcing quota limits in 2014 that seemed to be in line with those of 2013.

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