Increased rare earths export quota for 2012 brings China in limelight - AVL, REE, MCP

Slight increase in current year’s quota for rare earths exports in China Wednesday brought it into limelight. Decision isn’t so easy because controversies relate to it like exotic minerals monitored that usually mobile phone manufacturers and those in production of high-tech items require.

Tight production control in country forced for this decision to raise rare earths exports.

Meant for second half of current financial year, export quota set is 9,770 tons, announced Commerce Ministry. It is increase of more than 3 percent from previous year, said ministry spokesperson while explaining added quota meant for six months. It is now 30,996 tons for half year.

Approximately 30 percent of world's rare earths deposits are found in China. Interestingly production is more than 90 percent though.  Global manufacturers had watched it perilously and took steps to impose export curbs in 2009 itself.

China’s domestic processing industry had good share of profits earned from uses by American, Japanese and European organizations that used rare earths to manufacture technical items.

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Ministry officials in China were firm that foreign companies involved in using rare earths would prefer China for production and share technology with domestic market.

Earlier this year, complaint was filed by United States, European Union and Japan before World Trade Organization previously to take action against China that violated commitments about free-trade. Chinese officials defended the controls and said they strictly followed WTO norms as considered preserving nature for environmental protection.

State media stated this new measure sets minimum production level to 20 percent to shut down indeed.

Steps are taken to limit number of companies involved in exporting rare earths as is it indicated.

According to Chinese trading partners this export quotas and tax push up on rare earths prices to foreign parties cause unrealistic choice to sellers in home country.

Total 17 minerals combine in rare earths that are later used to manufacture different types of items.

Although United States, Canada, Australia and rest countries possess rare earths but their mining had already stopped in 1990s once cheaper Chinese ores were made available.

Decision by Beijing to control exports provokes foreign producers to take initiative and reopen theirs.

Shares of Molycorp, Inc.(NYSE:MCP) ended lower by 2.03% to $9.64, Rare Element Resources Ltd(NYSEAMEX:REE) added 1.24% to $4.07, Avalon Rare Metals (US listing)(NYSEAMEX:AVL) shares soared 5.35% to $1.97.