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China Does Not Control Pricing for Rare Earth

Author:管理员 From:本站 Browse Counts:30217 Public Time:2012-8-4 14:28:49

China as the world's largest rare earth producer and exporter does not control pricing power for rare earths, a columnist from Reuters told CRI on Thursday.

The export volume of rare earth metals from China in the first five months of this year fell 8.8 percent from a year earlier.

China recently scaled back its rare earth mining projects to try to maintain its supplies in the long term, while at the same time trying to protect the environment. In the meantime, the price of rare earth minerals doubled within two weeks after Chinese authorities began enforcing mining restrictions.

But Gu Wei, a columnist for Reuters Breakingviews, said she did not believe China controlled rare earth prices.

"I don't think China controls (them), because when it comes to control pricing one important element is you have very few producers for their oligopoly," Gu said. "Domestically, China currently doesn't have that situation yet with the world worrying about China producing and exporting the last rare earth to the world."

Gu added that traders had pushed the price of rare earth higher.

"It's the traders, I believe, who have been pushing their prices higher, and this year we have been impacted by prices that have increased 10 times over what they were last year," she said. "So it looks like an appeal that China finally getting more pricing power."

Rare earth elements are crucial for the production of components used in a variety of high-tech products such as wind turbines, missile guidance systems, hybrid car batteries and mobile phones, but mining them is known to be destructive to forests, soil and farmland. The waste produced after mining also damages the environment.

China's cabinet and Commerce Ministry last month issued another edict further tightening control over the industry by expanding the export quota system and imposing higher taxes on mining the minerals in an effort to promote the sustainable and the healthy development of the country's rare-earth industry.

Beijing also said it would get tough on companies that violated export quotas.

According to "The Wall Street Journal," the warnings appeared to have had some success in May, when exports fell 11 percent in April for 5,130 tons valued at $452.30 million.

Gu attributed past environmental problems to small miners.

"They paid no attention to the environment," she said. "They competed with each other in producing. The battle leading to environmental problems with rare earth can be quite dirty indeed."

Gu also hailed the authorities' positive move to tackle the environmental problems caused by small miners.

"Now what they are trying to do is let big state-owned companies take control and acquire those small companies," Gu said. "So hopefully, they'll adhere to higher standards themselves."

Gu added that the industry consolidation should help reduce environmental damage.