China rare earths safe from WTO ruling on export curbs

Reuters reported that a World Trade Organization ruling against China's restrictions on raw material exports could force changes to some of its rare earth policies but is unlikely to yield the boost in exports of the metals that consumers want to see.

A WTO panel decided that China had violated global trading rules by curbing exports of raw materials like bauxite, coke, magnesium, manganese and zinc which inflated prices and gave domestic Chinese firms an unfair competitive advantage.

Rare earth metals were not part of Monday's ruling but users of the crucial group of 17 elements used in the renewable and high tech sectors hope China will also scrap export limits on these commodities, leading to higher volume and lower prices.

Mr Vivian Pang an analyst with the Asian Metal consultancy in Beijing said that "It is still too early to say what the impact will be but I can't see it having a big impact on prices the main issue will still be supply and demand."

He said that the reason is that even if China removes export quotas it is unlikely to lift its production limits which are meant to limit environmental damage from rare earths mining and keep prices and profits high.

Moreover, Monday's ruling left open a loophole for export quotas if they were imposed for environmental reasons. China's environmental defence failed but it could further its case by beefing up a claim to be acting in the environmental interest.

China which produces about 95 percent of global rare earth supplies capped production at 93,800 tonnes in 2011 up only 5 percent compared with the year before despite soaring demand. It began a nationwide inspection at the end of August to stop rare earth miners from breaking the cap.

Mr Tu Xinquan associate director of the China Institute of WTO Studies said that “While the ruling could be a setback for China in its efforts to clean up and cash in on its rare earth reserves, its overall strategy need not change. There are other ways it can meet its objectives referring to the output limits.”

(Sourced from Reuters)