China to Tighten Restrictions on Rare Earth Industry

June 21, 2012

On June 20, 2012, China’s State Council released a white paper regarding China’s rare earth industry policies. In the report, Chinese officials indicated a strong commitment to restructuring China’s rare earth industry in order to address resource depletion and environmental concerns. Additionally, they noted that China intends to maintain its controversial export restrictions on rare earth products. Chinese officials argued that the introduction of stricter rare earth mining standards and controls is motivated by environmental concerns rather than for political or economic gain. The white paper further notes that excessive rare earth mining in China has resulted in landslides and clogged rivers, and has endangered people’s health and safety.

The white paper follows three months after the United States, the European Union, and Japan logged a complaint at the World Trade Organization over China’s export restrictions on rare earths, as well as tungsten and molybdenum. These materials are used as inputs in a variety of products and manufacturing sectors, including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum, and chemicals. According to the Office of the United States Trade Representative, China imposes several different types of export restraints on these materials, including export duties, export quotas, export pricing requirements and related export procedures and requirements.

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