Rare earths issue likely topic U.S.-China meetings

WASHINGTON Thu Oct 28, 2010 12:38pm EDT

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WASHINGTON (Reuters) - Chinese dominance of rare earth supplies and trade in the high-tech ores are likely to come up in U.S. President Barack Obama's or Secretary of State Hillary Clinton's upcoming meetings with Chinese leaders, a top White House Asia adviser said on Thursday.

Obama is holding a bilateral meeting with Chinese President Hu Jintao on November 11 in Seoul, where both will attend the G20 summit. Clinton is meeting Chinese State Councilor Dai Bingguo during a stop at China's Hainan island after visiting Hanoi during her October 27-November 8 trip to the Asia-Pacific region.

"I think it's likely that the issue will come up in -- in either -- in either or both (meetings). I can't say for sure," Jeffrey Bader, the senior National Security Council official for Asia, said at a news conference on Obama's trip.

China has slashed export quotas and reduced shipments of rare earth supplies to Japan, igniting international concern that it could use the exports as an economic or political lever. The high-tech ores are used in lasers, computers, superconductors and other applications. Prices have spiked and mining firms are rushing to develop sources of the minerals outside China.

The United States and the European Union this week said they were looking to address fears that China was choking the supply of the minerals.

Beijing said on Thursday it would not use its dominance of rare earth supplies as a bargaining tool with foreign economies. [nSGE69R09H]

Bader said the issue would be discussed at meetings during Obama's November 5-14 tour to India, Indonesia, South Korea and Japan, including the G20 in South Korea and an APEC summit in Japan.

"We've seen lots of reports over the last month or two indicating there have been constraints on Chinese exports. The facts are murky. This is a discussion that -- an issue that Secretary Clinton talked about yesterday with the Japanese foreign minister. We'll be talking about it with other leaders, including China," he said.

"The goal is to ensure that the international market functions without -- without hindrance, in ways that satisfies the needs of -- of major producers in the U.S. and elsewhere," Bader said.

(Reporting by Patricia Zengerle, editing by Stacey Joyce)

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