August 22, 2012 (Source: The Australian) -- China has increased its 2012 export quota for rare earths for the first time since 2005, issuing an additional batch today to bring the year's total to 30,996 tonnes.
The country's rare-earth export policies are closely watched as it controls 95 per cent of the world's production of the metals, which are crucial in a wide range of hi-tech applications including defence systems, wind turbines and smartphones.
However, the quota increase is largely symbolic as actual exports have fallen sharply - exporters have used up only around half of last year's quota. Customs data yesterday showed exports in the first seven months of this year are down 36.7 per cent.
The Ministry of Commerce said in a statement that it would set the second batch at 9770t, resulting in a full-year quota that's 2.7 per cent higher than last year's 30,184t. The ministry typically issues the quota twice a year.
The second batch includes 8537t of light rare earths and 1233t of medium-to-heavy metals.
North Square Blue Oak analyst Frank Tang said: "International pressure on China (to loosen export controls) has been quite high and the case has reached the World Trade Organisation.
"The government already said last year that it would keep its quota largely unchanged in 2012, and it's now signalling to the wider world not to worry."
Beijing might be re-evaluating the quota's usefulness, and has roped in industry experts for discussions on removing the cap, Mr Tang said.
The WTO said in July that it set a panel to probe China's rare-earth export policies following requests by the US, the European Union and Japan.
Beijing has defended its policy as a means to control a polluting industry, although its export restrictions have boosted prices in recent years.
Still, prices have fallen since last year due to weaker global demand. Prices of bellwether products such as neodymium oxide have more than halved since last year to around $US105t on Monday, according to Australia's Lynas Corp.
Since China began to drastically cut quotas from 2009 to restrict exports, global suppliers have made headway in meeting the shortfall and helped reduce dependence on Chinese supply.
US-based Molycorp has begun production at its California mine, and Lynas is due to start production at its Mount Weld facility this year. The two projects together could potentially account for about a third of global demand.
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