Rare Earths Supplies May Be Inadequate, China Says

By Bloomberg News

Sept. 3 (Bloomberg) -- China said supplies of two minerals used in hybrid cars and televisions may be inadequate for its needs, amid rising concerns that exports from the largest rare- earths producer may fall.

China has been tightening control of exports of rare earths, a range of 17 chemical elements used to make parts in Toyota Motor Corp.’s Prius and Apple Inc.’s iPods. Restrictions could heighten tensions with the U.S. and Europe, which in June filed a trade complaint against China for metal export limits.

“China itself may not have enough supply” of dysprosium and terbium, Wang Caifeng, deputy director-general of the raw materials department at the Ministry of Industry and Technology, said today. The government won’t ban shipments of rare earths in keeping with its export policy, she said, refusing to comment on possible further limits.

“The rest of the world has become a little concerned” about possible export bans from China, said Judith Chegwidden, managing director at London-based Roskill Information Services Ltd, an industry research group. “Dysprosium is increasingly used in permanent magnet motors in hybrid cars like Prius or wind turbines. Demand is growing fast.”

China contains about half of the world’s rare-earths reserves and produces more than 90 percent of global output. The government started to curb production and exports in 2006, after prices dropped to half of the level in 1990.

Falling Exports

Exports fell 35 percent to 34,600 metric tons in 2008 from 53,300 tons in 2006, according to Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., which owns the largest rare-earths mine.

“Demand is growing in areas of military defense, missiles, electronic information and green energy,” the ministry’s Wang said at a conference in Beijing. “Modern society can’t do without cell phones and televisions.”

China needs 70,000 tons of rare earth a year, she said.

Terbium is a silvery-white metal used to make alloys and phosphors used in lamps and TV tubes. Other rare earths include neodymium, which is used in mini hard drives in laptops and headphones in Apple’s iPod. Yttrium and europium are used to generate red on color TV and computer monitor screens.

Mining for rare earths has led to “serious pollution,” Wang said. To mine a ton of the material could lead to 2,000 tons of dirt and waste, she said.

China cut 2009 output quotas of rare earths by 8.1 percent from a year ago to 119,500 tons, the Ministry of Industry of Information and Technology said May 18.

Minor Metals

The Asian country is also encouraging producers of minor metals to export processed products rather than raw materials to increase the value of shipments, Liang Shuhe, deputy head of foreign trade at the Ministry of Commerce, said today at the conference.

Minor metals include antimony, magnesium, zirconium, mercury and bismuth, according to the Minor Metals Trade Association. China’s Jinduicheng Molybdenum Co. is Asia’s largest producer of molybdenum, used to harden steel.

“The majority of China’s minor metals exports remain in the raw material form,” Liang said. “We encourage exports of high value-adding, high-end products instead of the raw materials.”

--Feiwen Rong, Xiao Yu. Editors: Tan Hwee Ann, Jacob Lloyd-Smith.

To contact the reporters on this story: Feiwen Rong in Beijing at frong2@bloomberg.net; Xiao Yu in Beijing on yxiao@bloomberg.net.