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China cuts rare earth export quotas

China announced Tuesday that it will cut its export quotas for rare earth minerals by more than 11% in the first half of 2011, further shrinking supplies of metals needed to make a range of high-tech products after Beijing slashed quotas for 2010.

China produces about 97% of rare earth elements, used worldwide in high technology, clean energy and other products that exploit their special properties for magnetism, luminescence and strength.

The rare earth issue may further strain relations between China and the United States, which have been battered this year by arguments over everything from Tibet and Taiwan to the value of the Chinese currency. Chinese President Hu Jintao is due to visit the United States next month.

China’s Commerce Ministry allotted 14,446 tons of quotas to 31 companies, which was 11.4% less than the 16,304 tons it allocated to 22 companies in the first half of 2010 quotas a year ago.

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China slashed the export quota by 40% in 2010. The export restraints on rare earths has inflamed trade ties with the United States, the European Union and Japan in particular.

In Washington, the U.S. trade representative’s office expressed concern over the latest announcement.

“We are very concerned about China’s export restraints on rare earth materials. We have raised our concerns with China and we are continuing to work closely on the issue with stakeholders,” a spokeswoman said.

Last week, the trade representative’s office said China had refused U.S. requests to end export restraints on rare earths, and that the United States could complain to the World Trade Organization, which judges international trade disputes.

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Wind turbines and hybrid cars are among the biggest users of rare earth minerals, which analysts say are facing a global supply crunch as demand swells.

The little-known class of 17 related elements is also used for a vast array of electronic devices ranging from Apple’s iPhone to flat screen TVs, all of which are competing for the 120,000 tons of annual global supply.

Japan has been hard hit by the export curbs. Japanese imports of rare earths shrank further in November, reflecting the impact from China’s de-facto ban on shipments of the minerals that was lifted late last month.

Japanese companies had complained about restrictions on shipments of the metals by Chinese customs officials following a spat over disputed islands in the East China Sea, which led to the de-facto suspension by Beijing on exports from late September.

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The European Union also has expressed concern over China’s limiting of rare earths’ exports, though the bloc’s trade commissioner said earlier this month that China had reiterated that rare earth supplies would be sustained.

China says its curbs are for environmental reasons and to guarantee supplies to domestic industrial consumers. But it also has insisted that its dominance as a producer should give it more control over global prices.


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