EU says joint action needed on China rare earth curbs

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Top industrialised nations need to act in concert to challenge China's curbs on rare earths exports and any restrictions by Beijing that could jeopardise manufacturing would be "deplorable", the EU's trade commissioner has said.

Manufacturers also needed to step up efforts to diversify their sourcing of rare earths to reduce reliance on China, which produces around 97% of the world's rare earths, minerals crucial to production of high-tech goods from fibreoptic cables to smartphones and electric cars, Karel De Gucht said.

"I trust that we can come to a sensible understanding with China and to reach that, I think concerted action is very desirable and it is also happening," Commissioner De Gucht told Reuters in an interview after meeting his Australian counterpart.

Meanwhile, four US senators urged President Barack Obama this week to step up the fight against China for what they said was the "hoarding" of rare earths, and Washington has said it could complain to the World Trade Organisation about the restrictions.

China cut export quotas by 40% last year and reduced export quotas for the first half of 2011 by 35% compared to a year earlier due to what it said were environmental concerns over rare earth refining.

But De Gucht said the EU had extended a hand to China to solve its legitimate environmental issues and putting entire industries into jeopardy was not acceptable.

"They have been delivering with great appetite those rare earth materials in the past, I would say at prices which makes mining in other parts of the world quite impossible," De Gucht told Reuters in an interview.

"So if then all of a sudden they would interrupt or squeeze down their deliveries to a point that puts us in jeopardy, I would deplore this very much," De Gucht said.

But he said the dispute highlighted the need to find alternative supplies and he would meet with Australian rare earth firms on Thursday (17 March) to discuss the framework of securing alternative supplies.

He declined to name the companies he was meeting but Lynas Corp is the closest to beginning production and said it expects the first feed of ore into the concentration plant at its Mount Weld rare earths project in Western Australia in the week starting 31 March.

Arafura Resources, which owns the Nolans Bore rare earths mining project, plans to start up production in 2013.

"We certainly have to look at other sources of rare earths," De Gucht said.

He added that an upcoming WTO ruling on China's mineral exports could set the benchmark for how the rare earths dispute will pan out.

"Some time ago we have launched a case before the WTO on a number of minerals, not on rare earths, other ones. We are expecting in the coming days and weeks the result of that case and I think that could influence very much the climate," De Gucht said.

Sources familiar with the case said the WTO considers that China has export restrictions on raw materials that are questionable.

(EURACTIV with Reuters.)

Rare earth elements are used to manufacture high-tech products such as wind turbines, electronic consumer goods, nanotechnologies, batteries for electric cars and various military applications.

According to the EU, China is responsible for 97% of world production of rare earths.

Since 2005, China has imposed a rapid diminution of export quotas on a number of rare metals (from 60,000 tons in 2006 to 14,500 tons in 2011) and is mulling the introduction of a full export ban as of 2015.

In June 2010, an EU expert group identified rare earths among a group of 14 raw materials seen as "critical" for EU high-tech and eco-industries. It suggested that the European Union's global diplomacy should be geared up to ensure that companies gain easier access to them in future.

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