China to limit rare earth exports, official says

Inner Mongolia, with about 75 percent of China's rare earths, is imposing controls to revamp the industry, said Zhao Shuanglian, the autonomous region's vice chairman. It wants to limit production at mines with high-quality rare earth ores to avoid over-exploitation and boost prices, control exports, and merge companies to make them larger and more efficient, he told a news conference.

Inner Mongolia's government has also suggested setting up a national reserve mechanism for rare earths to stabilize prices, Zhao said.

"We are not taking a short-term view of just trying to prop up rare earth prices," he said.

Inner Mongolia produces about 50,000 tons of rare earth oxides each year, Zhao said.

Chinese demand for rare earths has surged as companies have shifted production of computers, mobile phones and other products to factories in China, but a curb on exports could hurt manufacturers in other countries which need the metals to make high-density magnets, low-energy light bulbs, computer disk drives, electric motors, lasers and catalytic converters.

China accounts for 95 percent of global production and about 60 percent of consumption of rare earths, which include such minerals as dysprosium, terbium, thulium, lutetium and yttrium, according to the U.S. Geological Survey. It supplies more than 90 percent of rare earths used by U.S. industry.

The United States supplied nearly all its rare earths needs from its own mines as recently as 1990, the USGS said. But it said American output plunged as the market was flooded with low-cost ore from China, which has lower labor costs and less-stringent environmental controls.

China wants to conserve scarce rare earth resources, according to Chinese media reports, citing a proposal by the Ministry of Industry and Information Technology. The reports said curbing supplies could push up slumping global prices and boost revenues, although they did not say if that was a government goal.

Zhao appeared to confirm the thrust of the ministry's proposal, but did not comment directly it.

The U.S. Embassy said Tuesday it is aware of China's draft plan on rare earths but has not seen its contents.

Associated Press researcher Bonnie Cao contributed to this report.