UPDATE 2-China 2012 rare earth quotas unchanged from 2011

Tue Dec 27, 2011 5:44am EST

Related Topics

* First tranche for next year set at 10,546 tonnes

* More quotas in reserve for firms that have not yet passed inspections

* Biggest producer Baotou Rare Earth still awaiting environmental approval (Recasts, adds detail of quotas in "reserve")

BEIJING, Dec 27 (Reuters) - China will keep rare earth export quotas for 2012 at this year's levels, it said on Tuesday, a move that will ease overseas worries about the supply of 17 crucial elements used in high-tech manufacturing.

China accounts for more than 95 percent of the global output of rare earths, which are used in the electronics, defense and renewable energy industries.

Beijing imposed an export quota of 30,184 tonnes this year, down only marginally from 30,258 tonnes in 2010, but still enough to stoke concern in the United States and elsewhere that it was seeking to strengthen its chokehold on global supplies.

The government said overall export quotas for the whole of 2012 would remain flat from 2011 "in order to guarantee international market demand and keep rare earth supplies basically stable".

The Ministry of Commerce (MOFCOM) said the first tranche of rare earths export quotas for next year had been set at 10,546 tonnes, but that figure only included those enterprises that had passed a series of stringent environmental inspections.

The first batch of quotas consists of 9,095 tonnes of light rare earths and 1,451 tonnes of heavy rare earths.

MOFCOM said earlier this month that a total of 11 firms had already been given the official go-ahead to export rare earths, including seven producers and four trading companies.

Quotas have been reserved for other firms -- including China's biggest producer, Baotou Rare Earth -- but will only be released if they are found to have complied with regulations.

The ministry said 12,605 tonnes of export quotas for light rare earths and 1,753 tonnes for heavy rare earths were now held in reserve for the companies still being inspected.

That brings the first tranche of quotas to a total volume of 24,904 tonnes. MOFCOM said the second tranche would bring the figure up by another 20 percent.

If the firms fail to qualify once the inspections are completed in July next year, the quotas will be reallocated but not reduced, it said.

Total exports stood at only 14,750 tonnes in the first 11 months of this year amid a nationwide inspection and crackdown on illegal activities in the sector.

China has been cracking down on illegal producers and traders since August, aiming to bring the sector under the control of a handful of favoured enterprises.

China's attempts to restrict output and exports have caused widespread alarm overseas, but Beijing has insisted that its attempts to impose order on the sector were primarily motivated by environmental concerns and are compliant with World Trade Organisation rules.

Analysts have said its policies are also designed to give priority of supply to domestic consumers and encourage foreign consumers -- mostly from high-tech strategic sectors -- to relocate their operations to China. (Reporting by Aizhu Chen, David Stanway and Ruby Lian; Editing by Sugita Katyal)

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