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China may reduce rare earth exports

Rob Schmitz Oct 19, 2010
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China may reduce rare earth exports

Rob Schmitz Oct 19, 2010
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STEVE CHITOAKIS: A mixed message today coming from China on the amount of rare earth metals that country exports. Those are minerals used in hybrid vehicles, iPhones, and high-tech missiles. The state-run newspaper “Daily” quoted a government official saying the country will cut exports by a third. But then hours after the article came out, another Chinese official issued a correction, saying exports will remain the same. Why is it such a big deal? China produces 95 percent of the global supply of rare earths.

Marketplace China Bureau Chief Rob Schmitz reports.


ROB SCHMITZ: When it comes to U.S.-China relations, “trade war” is a term being thrown around a lot these days. The notion that China’s drastically cutting rare earth exports may not signal a war, but it would certainly be a battle-one worth billions.

ARTHUR KROEBER: This is not a battle that they can win.

Economist Arthur Kroeber doesn’t buy the rumor that China will further cut rare earth exports. Why? Despite their name, there are plenty of rare earth reserves outside of China, they will be developed, and China knows this.

KROEBER: The more China attempts to use its present monopoly position as leverage in international disputes, the more certain they make it that that monopoly position will be destroyed.

China’s monopoly on these minerals may be short-lived. One big customer, Japan, is reportedly looking to Mongolia and Canada in an effort to reduce its dependence on Chinese rare earth metals.

In Shanghai, I’m Rob Schmitz for Marketplace.

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