| ¡¡ CHINA has tightened its control over rare earths by expanding its export quota system, imposing higher taxes and announcing that it wants its biggest companies to lead the industry's development.
It also said it will get tough with companies that resell export quotas and won't approve any new projects - or the expansion of existing ones - in rare earth separation over the next five years.
The measures were announced separately by the State Council, or Cabinet, and the Commerce Ministry in an apparently co-ordinated offensive in a sector that has become highly politicised.
The State Council said the country aims to concentrate 80 per cent of the heavy rare earth mining business in the hands of the three biggest companies in the next one to two years.
It's the first time that Beijing has publicly said it will let the three biggest companies head a consolidation of the industry.Sources told Dow Jones Newswires earlier that China Nonferrous Metal Mining Group and China Minmetals will be in the lead.
China, which supplies around 95 per cent of the world's rare earth metals, has been tightening its control over the sector by raising the threshold for entry, imposing stricter environmental standards and slashing export quotas.
First-half 2011 quotas total 14,508 tonnes, down about 35 per cent from the same period last year, according to the Ministry of Commerce.
These measures have boosted rare earth prices and made export quotas much more valuable.
China has also moved to make political gains from its dominant role in the sector.
Japanese companies said rare earth deliveries stagnated after Japan detained a Chinese fishing boat captain following a collision with a patrol vessel in disputed waters. China has denied any special curbs on exports.
More recently, a consultant to Taiwan's government told Dow Jones Newswires that Beijing had discussed giving the island greater access to China's rare earths in an apparent effort to gain goodwill with its government.
In the latest move, Beijing said it is raising the tax on light rare earth ores to 60 yuan a tonne from 0.4-3 yuan a tonne as of April 1, while hiking the tax on heavy ores to 30 yuan a tonne, also from 0.4-3.0 yuan a tonne.
"(China will) greatly increase rare earth taxes and refine its pricing mechanism to reduce the excessive profits in the rare earth mining industry," the State Council said.
China will also raise the threshold for companies applying for export quotas, though it didn't say whether this will reduce the number of qualified exporters.
China granted quotas to 22 Chinese companies and 10 foreign companies this year.
The Commerce Ministry said it will start imposing export quotas on ferroalloys containing more than 10 per cent rare earth minerals by weight, effective today.This year, China began imposing 25 per cent tariffs on exports of alloys with more than 10 per cent rare earth content.
Before the latest announcements, China had issued export quotas for rare earth primary products, including minerals and oxides, but its quotas didn't include alloys.
Rare earth alloys include rare earth ferrosilicon -with 17 per cent-37 per cent rare earth content -which is used as an additive in steel- and iron-smelting, and magnesium-rare earth, which contains 2 per cent-10 per cent of rare earth elements yttrium and gadolinium and is used in the aviation, automotive and defence sectors.
"Alloys like Dy-Fe alloy and terbium ferroalloy have a relatively high rare earth content, and including these alloys in the export quotas could help the government better regulate the industry and better protect resources and the environment," the Commerce Ministry said in a statement on its website, quoting an unnamed official at the ministry's foreign trade department.
Rare earths, comprising 17 elements, are usually categorised into two kinds - heavy rare earth, also called ion-absorbed rare earth, which is abundant in southern China, and light rare earth, which is found in northern China.
Heavy rare earths are more valuable, giving exporters an incentive to ship overseas for higher returns.
The State Council said it "clearly forbids" the resale of quotas and has promised to improve the system of allocating quotas.
People familiar with the situation have said previously that some companies with export quotas make big profits by reselling export quotas.
Beijing also pledged to combat illegal rare earth mining and mining above quota levels, as well as improve the export monitoring system to stamp out smuggling.
China is also building strategic stockpiles of rare earth metals, an effort that could give Beijing increased power in influencing global prices and supplies.
Surging rare earth prices have also triggered discontent in China's own downstream industries.
Some deep-processing companies are complaining that high raw material prices are squeezing profits, and they are unable to obtain the resource as some companies prefer to export rare earths for greater returns.
The State Council said it will halt approvals of rare earth separation projects in the next five years and "resolutely ban" capacity expansions at existing plants. |
