BEIJING (Reuters) - China said on Thursday it will not use its dominance of supplies of rare earths as a bargaining tool with foreign economies, and the United States said it hoped trade in the high-tech ores would continue as normal.
China has slashed export quotas and reduced shipments to Japan, igniting international concern that it could use rare earth exports as an economic or political lever. Prices have spiked and mining firms are rushing to develop sources of the minerals outside China.
The U.S. and European Union this week said they were pressing for solutions to fears that China was choking supply of the substances used in lasers, computers and superconductors, among other applications, and the issue is expected to figure at next month’s G-20 summit.
Chinese Ministry of Industry and Information Technology spokesman Zhu Hongren said Beijing sought international cooperation.
“China will not use rare earths as an instrument for bargaining,” he told a news conference on Thursday. “Instead, we hope to cooperate with other countries in the use of rare earths on the basis of win-win outcomes and jointly protecting this unrenewable resource.”
The ministry is one of several in China that oversee rare earths.
Zhu was speaking on the same day a newspaper published by China’s Ministry of Commerce urged China to resist pressure to allow foreign firms more access to its rare earths.
U.S. Secretary of State Hillary Clinton said she was unaware of China’s vow not to use them as a bargaining chip, and, speaking in Hawaii, said she would welcome any clarification of China’s stance on the minerals.
“I ... hope that it means trade and commerce around these important materials will continue unabated and without any interference,” Clinton told a news conference with Japan’s foreign minister.
“At the same time, because of the importance of these rare earth minerals, I think both the minister and I are aware that our countries and others will have to look for additional sources of supply,” she said.
One engineering firm, Japan’s Nidec, has already said it will start making motors that do not use rare earths to lessen reliance on the minerals.
China supplies about 97 percent of the world’s demand for rare earth metals, which possess magnetic, luminescent and other properties used in emerging clean energy technologies, computers and electronics.
Prices of some rare earths on world markets have increased tenfold this year, reversing a long-trend toward lower prices caused largely by greater Chinese production over the past two decades.
In response to higher prices and worries among major consumers such as Japanese hi-tech industries that they will be unable to rely on large scale deliveries from China, mining firms are scrambling to speed up mine development timetables.
Shares in potential producers of the minerals outside China, such as Molycorp and Lynas Corp have rocketed since July, when China said it was reducing exports by 72 percent in the second half of the year.
Australian firm Arafura Resources on Thursday raised A$90 million ($87.5 million) to develop a rare earths project, but some analysts have said the long-term investment case for the minerals may be weak, and the market has the makings of a bubble.
Writing by Daniel Magnowski, editing by Miral Fahmy