China’s recent export curbs on rare earth minerals have led several countries to file WTO complaints. Although China claims the export curbs are meant to protect the environment and preserve dwindling resources, the US, the EU, and Japan feel China is attempting to manipulate prices.
China possesses 30% of all rare earth deposits. It is also one of the largest producers of rare earths, accounting for 90 percent of global production. One could argue that it is using its stronghold on the rare earths market to manipulate prices and benefit its own manufacturing sector.
Rare earths are valuable minerals used in electronic devices such as mobile phones, camera lenses, and televisions. They are also used in many cleantech products such as wind turbines and hybrid cars.
By limiting the number of rare earth metals it exports, China is allowing its own manufacturers to take advantage of lower prices and greater supply. Meanwhile, other countries are forced to fight over a tightening supply and higher prices.
One can observe the result of China’s export controls by looking at the prices of rare earths. For example, terbium oxide this week cost $2,000 per kilogram on world markets while its price tag in China was $975. Dysprosium oxide cost $1,030 per kilogram on the world market and $660 in China this week.
Beijing has announced an export quota of 10,546 tons for the first half of this year. But already, the US, the EU, and Japan have launched a dispute at the WTO over China’s export controls. If no resolution is achieved within 60 days, the case can be brought to a WTO panel for a ruling. Sanctions against China are possible depending on the outcome of that ruling.
Meanwhile, producers in Australia, Canada, Russia, India, and elsewhere have announced plans to reopen their rare earth metal mines in response to China’s export curb.
Public domain image by Peggy Greb, US department of agriculture: Rare earths