Burma boosted by rare metals boom

Dec. 28, 2010

South Korea has struck a deal with Burma to develop its natural resources in the latest attempt by industrialized nations to secure new sources of rare earth minerals to circumvent the near-monopoly exercised by China.

Rare earth metals are vital components of a variety of technological products, including smart phones and hybrid cars. Most countries have had supplies squeezed since China, which produces 97 per cent, restricted exports this year.

China said Tuesday that exports would be cut by a further 11 per cent in the first few months of next year.

That South Korea should be doing business with a pariah state such as Burma is a measure of the panic that the export restrictions have created among big producers of electronic goods. In September, Beijing halted supplies to Japan, which consumes 60 per cent of China's rare earth exports, after a diplomatic spat over the arrest of a fishing boat captain in disputed Japanese waters.

Concern that stockpiles of rare earth minerals could run out by March prompted Tokyo to explore a deal with Vietnam to mine the metals, which are used in everything from earphones to hybrid car batteries, computer discs and guided missiles.

Beijing denied any official ban on exports to Japan, but figures show it cut export quotas by 72 per cent in the second half of the year, leading to a sharp jump in prices.

Rising prices have also spurred America to begin reopening rare earth mines. A California mine closed in 2002 because of environmental concerns and low prices has recently reopened, though production will not reach full capacity for two years.

Chen Jiazuo, a metals research analyst, said of the latest cuts in exports: "This is in line with government officials' comments that we need to protect the environment and resources. Controlling domestic production capacity, output and exports will continue to be the theme."

The latest move to curb exports may further exacerbate tensions with America, which last week said it may file a complaint at the World Trade Organization over restraints on supplies of the minerals. Rare earth minerals are 17 chemically similar elements including neodymium, cerium and lanthanum. The price of neodymium oxide, used in magnets in BlackBerrys, has risen more than fourfold to $88.5 a kilogram from $19.12 in 2009.