BEIJING May 27 China's biggest rare earth
producer, Baotou Steel Rare Earth (Group) Hi Tech ,
has won local government approval to start an exchange to trade
the increasingly lucrative metals used in many high-tech goods,
state media reported on Friday.
The regional government of Inner Mongolia, where the
Shanghai-listed company's mining and processing operations are
based, gave the "green light to the establishment of a rare
earth exchange in the city of Baotou," the Xinhua news agency
reported, citing city officials and an earlier statement from
the Baotou Steel Rare Earth (Group) Hi Tech.
That company and another, Inner Mongolia Hi-Tech Holding Co.
Ltd., will run the exchange, said the report, which did not say
when the bourse would open or whether the central government has
also given its nod.
The report called the decision a "breakthrough" in Chinese
companies' efforts to establish a unified national exchange that
will "regularise market flows of rare earths" and give them
greater leverage over foreign buyers.
But the exchange would confine itself to relatively modest
trading in at least some of the 17 elements categorised as rare
earths, the report suggested.
"The government required that the exchange should not deal
in futures trading," it said.
"Sources close to the matter say the exchange can only deal
with spot transactions of rare earth."
The exchange will nonetheless help China "play its influence
over rare earth pricing on the global market," said Xinhua,
citing industry observers.
China controls about 97 percent of rare earth output, and
has alarmed customers in Japan, the United States and Europe by
clamping down on production and sale of rare earth elements,
citing a need to clean up highly polluting production processes
and to stop illegal exports.
The crackdown cut exports by 62 percent in the first four
months of 2011 compared with a year earlier, and has been a
windfall for rare earth miners and prospectors outside China,
such as U.S. firm Molycorp Inc .
China's exports of rare earths fell by more than half in
April from a year previously, a Reuters breakdown of detailed
Customs data showed this week, despite headline official data
that indicated a rise of 46 percent. [ID:nL3E7GN1PS]
This month, Beijing said it will crack down on smuggling of
rare earths and impose quotas for exports of rare earth alloy
products as part of its campaign to strengthen control over the
(Reporting by Chris Buckley; Editing by Ken Wills)