Business groups want G20 to press China on rare earths

BEIJING Fri Nov 5, 2010 7:34am EDT

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BEIJING (Reuters) - Major business groups from the United States, Japan and other rare earth consumers have urged the G20 group of major economies to press China to end export curbs of the metal ores.

The demand for world leaders to address underscores how quickly access to this niche of China's mining output has risen as a business and political issue.

The letter, signed by the Alliance of Automobile Manufacturers, the Consumer Electronics Association, BUSINESSEUROPE, Japan's Nippon Keidanren business lobby and 33 other groups urges the G20 summit in Seoul next week to make unfettered access to rare earths "a top priority".

Though the letter does not name China, it is clearly the target as supplier of about 97 percent of the world's rare earths, which are used in a variety of hi-tech and clean energy industries.

A copy of the letter was given to Reuters on Friday by a person involved in organizing it, who demanded anonymity.

Rare earths are a range of 17 metals with magnetic, luminescent and other properties, and China's quota reductions and recent supply blockages, especially to Japan, have rattled companies and governments dependent on those supplies.

"Rare earth elements are essential to the clean energy, automotive, petroleum refining, chemical and electronics industries or today and tomorrow," said the letter.

"There is a substantial and growing risk, however, that without adequate supply and open access to such elements, global efforts to address climate change, promote innovation, and advance global growth will be significantly hindered."

U.S. President Barack Obama, Chinese President Hu Jintao and other leaders should agree to "refrain from export taxes, quotas and other market-distorting measures on rare earth elements that restrict global supply and unnecessarily contribute to price volatility," says the letter, which was dated Wednesday.

Governments should also "renounce interference with commercial sale of rare earth elements, domestically or internationally," says the letter.

The letter was sent to governments attending the Seoul summit next Thursday and Friday, said the source who provided it.

This year, Beijing slashed rare earth ore export quotas by around 40 percent from 2009 levels, saying it needs to protect reserves from reckless exploitation. Disruptions of shipments to Japan, in a diplomatic row with China, have raised the prospect of Beijing using its hold on supplies for political leverage.

China mined about 120,000 metric tons of rare earths in 2008.

Chinese commerce officials have said those export quotas will be pared a little more next year.

China holds about a third of known, exploitable global reserves of rare earths, but it worries that its supplies will be depleted within decades at current rates of mining.

President Obama could take up the rare earths issue when he meets President Hu in Seoul, the White House has said.

(Reporting by Beijing Newsroom, editing by Jonathan Thatcher)

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