China starts stockpiling rare earths
SHANGHAI, JULY 5:
China has started stockpiling rare earths for strategic reserves, a state-backed newspaper said today, in a move which may raise more worries over Beijing’s control of the coveted resources.
China has already started the purchase — using state funds — and storage of rare earths for strategic reserves, the China Securities Journal said, but did not say exactly when the initiative was launched.
The country produces more than 90 per cent of the world’s rare earths, which are used in high-tech equipment ranging from iPods to missiles, and it has set production caps and export quotas on them.
Major trading partners last month asked the World Trade Organisation to form a panel to resolve a dispute over China’s export limits on rare earths after earlier consultations through the global trade body failed.
The European Union, the United States and Japan claim China is unfairly choking off exports of the commodities to benefit domestic industries.
The newspaper said current low prices for rare earths had prompted the start of strategic buying and the reserves could be used to address future shortfalls of the resources.
China had already announced its intention to build a strategic reserve system, but had not publicly said that it had started stockpiling.
China has previously defended its rare earths policies, saying they aim to protect resources and the environment as part of an effort to promote sustainable development.
A Chinese official said last month the regulation of the rare earths industry was in line with global trade rules.
Gao Yunhu, Vice-Director of the Rare Earths Office of the Ministry of Industry and Information Technology, said its management of the industry was “in full compliance with WTO rules“.
Chinese market players hope the strategic buying will help stabilise prices, which plunged in the first half of this year after companies sold stocks ahead of planned tax changes, the newspaper said.