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Rare Earth Restrictions from China

Written By Brianna Panzica

Posted September 19, 2011

China produces over 95% of the world’s rare earth metals.

Trading strains began when China started imposing tariffs on these rare minerals, pushing up prices of the products that required them.

The growing nation also created export quotas, restricting further the number of rare earths distributed internationally.  In the past two years, the export quota has fallen over 40%.

Now, in an effort to reduce national pollution, China is essentially shutting down rare earth production, at least for the time being.

The process of mining and producing rare earth minerals is toxic, which is a main reason few other countries produce them on their own.

According to the New York Times, China has either closed or nationalized many production companies for the time being.

To control the pollution problem, the government is looking to monopolize the industry.  It will create Bao Gang Rare Earth in the north, a monopoly controlling ore extraction and production.

In the south, the nation will fuse 80% of rare earth companies into two or three giant companies, says the article.

For now, many of these companies remain closed or under strict watch until they can install pollution control equipment, which will be required by October 1, says the New York Times.

Before the pollution restrictions came into play, the United States and European Union planned to counter China’s tariffs and quotas at the World Trade Organization meeting, the article reports.

Now, however, even if these restrictions are removed, China will maintain pollution-related restrictions.

The nation is worried about air, water, and even radiation, which comes as a result of mining methods.

As Reuters reports, Xu Xu, chairman of the China Chamber of Commerce of Metals, Minerals, and Chemicals Importers and Exporters, implored other nations to “share the burden” of rare earth mining.

The restrictions have affected prices, especially in the alternative energy field.

According to the New York Times, rare earth metals are used heavily in the manufacturing of fluorescent bulbs, wind turbines, and hybrid car engines.

The price of the average fluorescent bulb jumped 37% in the past year due to these trade restrictions, and it should be expected to rise even more as China aims to prevent pollution.

January will mark the start of a law signed by George Bush in 2007, requiring the phase out of incandescent bulbs, to be replaced by fluorescent bulbs, reports the New York Times.

If the trade restrictions keep up, this new law is going to hurt the wallets of many Americans as well as the fluorescent bulb manufacturers and retailers.

That’s all for now,


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