The United States and the European Union slammed China's partial easing of export control of the rare earth minerals on Thursday.
While the EU said the limited easing of export curbs will not ensure stable supplies the US said Beijing was moving in the wrong direction.
China's vice-like grip on rare earths supply has been a thorn on the side of European Union as well as highly advanced countries like Japan and the US. The reasons are not far to seek.
Rare earths are indispensable for high-tech industries and are heavily in demand in defense systems, electric cars, wind generators, hard-disk drives, mobile communication, missile guidance and the like. The 17 rare earth elements are lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium.
China controls a whopping 97 percent of this market, making advanced industrialized nations heavily dependent on it for the supply of these essential chemical minerals. Technically viable alternatives to rare earth materials are not known currently.
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On Thursday, China announced it would ease export restrictions to the near-2010 levels. But major trading partners were not impressed.
This is highly disappointing and the EU continues to encourage the Chinese authorities to revisit their export restrictions policy to ensure there is full, fair, predictable and nondiscriminatory access to rare earth supplies as well as other raw materials for EU industries, EU's trade spokesman John Clancy said.
The US too chimed in, saying the move was disappointing. We continue to be deeply troubled by China's use of market-distorting export restrictions on raw materials including rare earths, USTR spokeswoman Nkenge Harmon said, according to Reuters.
Why the industrialized world is alarmed over the Chinese move to impose restriction on rare earths exports, which was announced last year, is clear. According to a Wealth Daily report, more than 20 kilograms of rare earth minerals are required for manufacturing just one Prius hybrid car.
... prices will continue to go up — bad news for America, Japan, and anyone else with their sights set on a green future, Ian Cooper. Consider that fifty pounds of rare earth minerals are required to build a single Toyota Prius, and dysprosium is used to reduce the weight of magnets in electric motors.
We can all agree that rare earth prices are exploding. And we can all agree that we still have no alternatives, he added.
Beijing brought in restrictions on rare earths exports last year in order to maximize profit and support domestic high-tech companies. China's commerce ministry has said the country has the right to cut export quotas to preserve exhaustible resources.
Reuters reported that in the latest move, China set the second batch of quotas at 15,738 tonnes, bringing the full year total to 30,184 tonnes. Last year's second batch of export quota was fixed at just 7,976 tonnes.
Industry observers aver that there is no significant change in China's rare earth policy. Continued clampdown on exports and state control on rare earths trade can cripple the thriving electronics industry of Japan, Taiwan, South Korea and the United States. From iPhones to LED televisions and from electric cars to missile guidance systems, rare earths are an indispensable raw material for for all advanced industries.