You’ve probably never heard of dysprosium. But as a material essential in the making of smartphones, you’ll likely have some in your pocket.
This obscure mineral, along with 16 other rare earths, is at the forefront of a dispute between China and its biggest trading partners (for more background see WiC81).
The cause? China is thought to mine around 97% of the world’s rare earths, but is increasingly reluctant to share the proceeds.
After imposing export quotas, the price of some of these minerals has soared (a kilogram of dysprosium is 10 times more expensive than last year, for instance). And rare earth becoming rarer means extra cost pressure for the producers of everything from batteries and laptops to guided missiles.
That has led to the WTO getting involved. The trade body ruled last week that China has broken rules by limiting the export of certain raw materials, such as bauxite and zinc – and the US and Europe believe that the ruling puts them in a better position to force China into exporting more rare earths too.
“I expect that China will now bring its export regime in line with international rules,” Europe’s trade commissioner Karel de Gucht said in a statement. “Furthermore, in the light of this result China should ensure free and fair access to rare earth supplies.”
A quick look at recent history suggests that de Gucht might be right. China has caved in to pressure from the WTO before (at least in terms of revisions to official policy) in relaxing its restrictions on foreign procurement or cutting subsidies to its wind power industry.
But those familiar with the current case think China might stand firm this time. “The issue of whether China can legitimately hold on to its resources or whether it will be forced to keep exporting them is surely an argument that China would want to win,” a source told Reuters.
China’s justification for the export quotas is an environmental one, as a means to conserve a vital natural resource – the mining of which it says can cause ecological fallout (similarly reasoning was used in the US to shutter rare earth mines). An article in the People’s Daily also insists that this is a matter of economic sovereignty, and that China’s policy is “neither contrary to international rules, nor against WTO commitments.”
The article also highlighted that other countries have an abundance of rare earths, but have yet to start mining them.
“Compared to countries also rich in rare earth resources, but refusing to mine them, China is now providing 31% of its reserves for more than 90% of the world’s supply of rare earths, making great contributions to the supply and stability of the world’s rare earth market,” claimed Chen Deming, minister of commerce.
Chinese nationalists go further. For the past decade we’ve been selling our rare earths cheaply, they say, and depleting our own reserves. So while our own environment suffers, the West keeps its own rare earths for future use. China’s new policy, they argue, merely ensures that the country’s supplies of rare earths will last longer and fetch a ‘fairer’ price.
But critics say export quotas disrupt supply chains and give Chinese companies an unfair advantage, as they can buy rare earths at a price lower than the international market. This means that they can make goods cheaper than their foreign counterparts. Rather than an export quota, the critics want production quotas, which would affect Chinese companies just as much as foreign ones.
The hunt is also on for new sources of rare earths elsewhere. The Japanese are particularly keen, having seen China embargo its supplies in a diplomatic dispute last year. Its scientists think they’ve just found 100 billion tonnes worth in the Pacific.
Meanwhile, Shanghai Daily reports China will leave its 2011 export quota “basically unchanged”.
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