January 5, 2015 / 3:46 AM / in 3 years

China abolishes rare earth export quotas: state media

BEIJING (Reuters) - China has scrapped a quota system aimed at restricting exports of rare earths, a group of 17 metals used in high tech sectors, as it moves to comply with a World Trade Organisation (WTO) ruling last year, official Chinese media reported on Monday.

The Ministry of Commerce issued a notice at the end of December that abolished export quotas for rare earth, as well as tungsten, molybdenum and fluorspar, Shanghai Securities News said.

China is responsible for more than 90 percent of global rare earth production, giving it a chokehold over the supply of a group of elements used in sectors such as defense and renewable energy.

It raised tariffs and imposed strict quotas in 2010, saying that cheap prices on the global market were not enough to cover the huge environmental costs of production, but importers in Japan, Europe and the United States complained that the move breached trade rules.

China was widely expected to abolish the quota system and replace it with higher resource taxes following a WTO ruling in March last year that the tariff and quota system was discriminatory and gave unfair advantage to domestic consumers.

The government has sought to improve China’s pricing power over rare earths by imposing strict domestic production caps and cracking down on illegal production and smuggling.

It has also raised environmental and production standards and encouraged big state firms to take over smaller private producers.

Reporting by David Stanway; Editing by Alan Raybould

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