Tuesday, October 12, 2010

China Rare Earth Exports Still Stalled

According to Japanese officials (via AP):
Japanese officials said Tuesday they have not seen any easing of China's de facto ban on exports of rare earth minerals — crucial for advanced manufacturing — despite a thaw in tensions over a territorial row between the two Asian powers.

China has denied that it has halted exports of the materials. But Japanese companies have said shipments of rare earths have virtually stopped since around Sept. 21, held up at Chinese ports by increased paperwork and inspections.

"The reality is, the situation has not at all returned to normal," trade and industry minister Akihiro Ohata told reporters Tuesday. Ohata said he is considering sending senior trade officials to Beijing for talks if the problem persists.

China produces 97 percent of the global supply of rare earths. To cope with growing demand at home, China has been reducing export quotas of rare earths over the past several years, causing concern about the minerals' supply long before September's restrictions to Japan.

Shaken by the potential threat of supply disruptions to its manufacturers, Japan is considering becoming a global center for rare earth recycling and is partnering with Mongolia to develop new rare earth mines.
I should think so. This incident is a wake-up call to governments everywhere that the current situation of China producing 97% of rare earths is a massive strategic vulnerability. The US and Europe ignore this at their peril.

3 comments:

Matt Warren said...

I've been reading about this in a few places. It's amazing to me that technocrats haven't identified and publicized this supply chain risk way before now.

noiseformind said...

I believe this sort of issue will only grow in the global markets. China as an internal demand growth that out passes any economy in the world. And they need to produce the final material because they still depend on the exterior to generate the value in order to pay their population growth. This equation is ticking bomb for the end of the global equilibrium as we knew it for all our lives.

Hal said...

I'm not sure if it's a problem with the language in the story, but can China really have "export quotas" under the WTO? Or are they the 500 lb gorilla no one dares challenge?