China's Rare-Earth Exports Plunge 77% in October After Reduction in Quota

Rare-earth exports from China, the world’s biggest supplier, declined 77 percent in October from a month earlier after the government reduced shipment quotas for the second half.

Exports were 830 metric tons last month compared with 3,660 tons in September, the General Administration of Customs said in an e-mail. Total exports were 32,990 tons in the first 10 months, according to the e-mail, which was sent yesterday.

The export restrictions on the minerals, used in laptops, missile-guidance systems and hybrid cars, sparked a surge in rare-earth prices and highlighted global dependence on China for shipments. Commerzbank AG said that prices may advance further as supplies may dwindle, according to a Nov. 11 report.

The decline is “a result of quota reduction for the second half,” said Peng Bo, an analyst at Guosen Securities Co., referring to China’s 72 percent cut in July-to-December volumes to ensure domestic supplies. “People are more concerned whether the government will further cut quotas next year,” said Peng.

Japan, the largest rare-earth importer, has stepped up efforts to diversify supply sources, develop substitutes and recycle minerals from used products after shipments from China were disrupted in September.

Vietnam, Mongolia

Japan and Vietnam signed a deal to cooperate on rare earths, according to an October statement from Japan’s trade ministry, which didn’t give details. Mongolian President Tsakhia Elbegdorj earlier this month called for Japanese companies to invest in rare earths in his country.

To be sure, the Japanese trade ministry said on Nov. 19 that Beijing was making it easier to import rare earths into Japan, citing a survey. A total of 16 Japanese companies reported the situation with Chinese customs was getting better.

The ministry conducted the survey between Nov. 16 and Nov. 18 among 34 domestic trading companies and rare-earth users, without identifying them. Trading houses Sojitz Corp. and Sumitomo Corp. import most of Japan’s rare-earth needs.

Prices for rare earths will probably keep rising as new supplies won’t appear any time soon, Commerzbank said in its report. While China may “mitigate its position in the face of strong international pressure, supplies of rare earths are likely to decline further, with delays in the startup of envisaged projects,” the bank said.

Export Quotas

China won’t “dramatically” cut rare-earth export quotas next year, Vice Commerce Minister Chen Jian said on Nov. 1. Yao Jian, a spokesman for the commerce ministry, told a Nov. 16 briefing that China also wants other countries to exploit their own rare-earth resources to ensure global supplies.

Rare earths comprise a group of 17 metals including neodymium, lanthanum, cerium and europium. While the elements aren’t as rare in nature as the name implies, they are difficult to find in profitable concentrations.

Shares in Molycorp Inc., the Greenwood Village, Colorado- based owner of the world’s largest non-Chinese deposit of rare- earth metals, have more than doubled since July. The company aims to restart a mine in California next year and President Mark A. Smith has said recent price gains are “sustainable.”

--Xiao Yu. Editors: Jake Lloyd-Smith, Richard Dobson