China to set up rare earths trade body

Thursday, December 30, 2010

BEIJING - China plans to set up an industry association and a government unit for the rare earths industry to gain more control over the precious metals, a media report said.

The rare earths industry association is likely to be launched in May next year and will assist companies in exports and international cooperation, Wang Caifeng, a former official of the Ministry of Industry and Information Technology (MIIT), who is setting up the group, said at a forum.

“We will be on the frontlines, leading price talks with foreign buyers. Our role will be similar to that of the China Iron and Steel Association (CISA),” China Daily Wednesday quoted Wang as saying.

Chinese industry associations have served as agents through which companies negotiate with foreign suppliers and buyers, such as CISA representing Chinese steelmakers in talks with global miners on iron ore prices.

China also plans to set up a government unit in 2011 to specifically manage the rare earth sector, said an industry insider requesting anonymity.

There are six ministry-level bodies overseeing the sector, including MIIT, the National Development and Reform Commission and the commerce ministry.

“The MIIT is leading the work of setting up the new unit, but it hasn’t been decided whether it will be vice-ministerial or bureau level,” he said.

“The new unit will formulate the industry plan and guide the industry,” he added.

China has released guidelines to reform the industry by cracking down on illegal mining practices, encouraging more consolidation and reducing exports as oversupplies have depleted its own resources and seriously damaged the environment.

Rare earths, composed of 17 elements, are used in a number of high-tech processes ranging from wind turbines and hybrid cars to missiles. China has about 30 percent of global rare earths reserves, but produces 97 percent of the world’s total.

China Tuesday issued the first round of 2011 export quotas for 14,446 tonnes of rare earths, 11 percent less than the first round last year, according to a statement posted on the commerce ministry website.

On claims made by US on China’s alleged restrictions on exports of rare earths, experts said China’s policy has never violated the rules and regulations under the framework of the World Trade Organization (WTO).

On Tuesday, the office of the US trade representative filed complaints to the WTO against China’s trade policy for the alleged “excessive government intervention”. The rare earths export policy was highlighted in the report.

“China’s moves are based on market demand and economic development. Based on this, no one should blame China,” Wang said.

Zhang Anwen, deputy secretary-general of the Chinese Society of Rare Earths, said: “China’s measures are for the sake of protecting the environment for the sustainable development for the industry.”

Since 2006, the country has imposed temporary taxes on rare earths exports and set limits on quotas. In 2010, China reduced export quotas to 60 percent, causing alarm among importing countries such as Japan.

The finance ministry said on its website last week that China will raise the export taxes for some rare earth minerals to 25 percent in 2011.

The country is speeding up the pace of mergers and acquisitions in the rare earths sector and is encouraging consolidation among state-owned enterprises. China plans to cut the number of rare earths companies from the current 90 to 20 by 2015.

Filed under: Economy

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