China Is Said to Resume Shipping Rare Earth Minerals

Agence France-Presse — Getty Images

Soil containing rare earth minerals ready to be loaded at a port in Lianyungang, China, for export to Japan last month.

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After blocking shipments of raw rare earth minerals to Japan since Sept. 21, and to the United States and Europe since Oct. 18, Chinese customs officials, without explanation, allowed shipments to resume to all three destinations, said industry officials who insisted on anonymity because of the diplomatic sensitivity of the issue. Resumed shipments to Japan still face additional scrutiny and some delays.

The decision came a day and a half after Secretary of State Hillary Rodham Clinton announced plans to visit China on Saturday. She met on Wednesday in Honolulu with Japan’s foreign minister, Seiji Maehara, and said afterward that the suspension of shipments had been a “wake-up call” and that both countries would have to find alternative suppliers.

Ms. Clinton said at a news conference in Honolulu that she would raise the issue of the suspension at a meeting Saturday on China’s Hainan Island, a resort island east of Vietnam, with Beijing’s state councilor for foreign policy, Dai Bingguo. China produces 95 percent of the world’s rare earths, essential for a wide range of high-tech industries.

Because China is on the opposite side of the international dateline from Honolulu, it was already midday on Thursday in China by the time Ms. Clinton spoke and rare earth shipments had resumed. Chinese customs officials allowed rare earth shipments to proceed starting Thursday morning China time, industry officials said.

Officials in two departments of China’s General Administration Customs in Beijing declined to comment on Thursday evening regarding the status of rare earth exports. The commerce ministry, which handles trade policy, also had no immediate comment.

Senior commerce ministry officials have insisted repeatedly that they have not issued any regulations halting shipments. They have suggested at various times that the halt represented either a spontaneous and simultaneous decision by the country’s 32 rare earth exporters not to make shipments because of a deterioration in Sino-Japanese relations or a greater thoroughness on the part of customs inspectors.

Even with customs officials allowing containers of rare earths to leave China’s docks, foreign buyers face a separate, serious problem. China has repeatedly reduced its export quotas for rare earths over the last five years so that they are now well below world demand.

No more than a few thousand metric tons remain to be shipped under this year’s quota, out of 30,300 metric tons of authorized shipments. World demand for Chinese rare earths approaches 50,000 tons a year, according to industry estimates.

The value of the remaining quotas has soared to the point that the right to export a single ton of rare earths from China now sells for about $40,000, including special Chinese taxes.

That is a sizable additional cost for buyers of neodymium, a rare earth used to make lightweight, powerful magnets essential to everything from large wind turbines to gasoline-electric cars to Apple iPhones. Neodymium currently sells for about $40,000 a metric ton in China, having recovered from a nose-dive during the global economic crisis, and almost twice that much outside of the country because of the export restrictions, according to data from Metal Pages, a database service in London.

The cost of quotas has become exorbitant for users of lanthanum, which is vital for the catalytic converters that clean the tailpipe pollution of conventional, gasoline-powered cars. Lanthanum, mostly produced here in Baotou, sells for less than $4,500 a ton in China, a price that has changed fairly little in recent years, and up to 10 times as much outside of China because of the export restrictions.

This has created a big incentive for companies to move factories to China, and many already have.

China’s interruption in exports has caused much more distress in Japan than in the United States or Europe, and not just because Japan’s shipments were cut off much earlier.

China only requires export quotas for shipments in which the material has a rare earth content of about 50 percent or more. High-tech materials made from rare earths, like special magnetic powders for the clean energy and electronics industries or polishing powders for the glass industry, are not subject to quotas and are inexpensively available.