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China Rare-Earth Exports Rise
Time£º2011/5/21¡¡ Hits£º3820
¡¡

 BEIJING—China's exports of rare-earth ores and metals in the first four months this year rose 33% on year to 18,614 metric tons, even as Beijing orders drastic cuts to the country's rare-earth exports, customs data supplied by Hong Kong-based Economic Information & Agency showed Saturday.

The data suggest that even as the government has repeatedly vowed to crack down on illegal mining and tighten control over supply, its reach on reducing actual exports may be more limited.

Early this year, China said it had cut its quotas for exports of rare-earth metals for the first half of 2011 by about 35%.

On Thursday, China's cabinet and Commerce Ministry said it would further tighten its control over rare-earth metals by expanding its export-quota system and imposing higher taxes on the minerals, which are used in such high-tech applications as laser-guided weapons and hybrid-car batteries.

It also said it would get tough on companies that violate export quotas.

It isn't the first time trade data have shown the limits of Beijing's will. Last year, actual rare-earth exports declined 9% compared with 2009, even though the government had vowed to slash the export quota by about 40%.

Still, the government's move Thursday threatening further crackdown in the sector sent stocks of rare-earth equities companies soaring Friday. While the rest of China's shares ended flat, state-owned Inner Mongolia Baotou Steel Rare-Earth, China's largest producer of the metals, gained 6% to 64.88 yuan ($9.99) a share.

Rare-earth prices were relatively flat last month.

Export values of rare earth in April fell 1.3% from the previous month to $395.8 million, keeping in step with a 2% decline in export volume of 5,765 tons, said the Hong Kong agency, which obtains its data from official Chinese customs sources.

Typically, China's rare-earth export value vastly outpaces its volume growth. For example, in the first four months this year, the value of such exports have surged eight times on year to $1.1 billion, the agency said.

China supplies about 95% of the world's rare-earth metals, but has sought to seek more control over pricing the commodity amid rampant smuggling and a sprawling mining industry.

On Thursday, China also said it will also raise the threshold for companies applying for export quotas, and the Commerce Ministry said it will start imposing export quotas on ferroalloys containing more than 10% rare-earth minerals by weight.

Beijing also pledged to combat illegal rare-earth mining and mining above quota levels, and to improve the export-monitoring system to stamp out smuggling.

The Eurasia Group has noted that rising prices may actually backfire on Beijing's plans.

"Driving up prices might have the unintended consequence of rallying local governments and private players to resist consolidation, as they move to protect resources that are now viewed as more profitable," said Damien Ma, a China analyst for the consultancy based in Washington, D.C.

China is also racing to match Japan, which analysts say may have years' worth of rare-earth consumption already locked up.

"The Japanese say no, but the Chinese believe Japan already has two to three years' worth, and I'm inclined to be closer to the Chinese view," Michael Komesaroff, a minerals expert and principal of Urandaline Investments said last week.

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