China ‘controls supply and fixes prices’ of rare earths

10 August 2012

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10 August 2012 | Adam Leach

China is able to “fix the prices and control the supply” of rare earth commodities on the global market because of increased regulation and its strategic reserves.

A paper by the Institute for Defence Studies and Analyses argued as the government takes increased control of rare earth elements, the Chinese Ministry of Industry and Information Technology now oversees activity in the sector, and its ability to control the global market increases. Some 90 per cent of the world’s rare earth reserves are found in China.

In the report, China Consolidates the Rare Earth Industry and Builds Strategic Reserves, Nabeel Mancheri, a post doctorate research fellow at the National Institute of Advanced Studies in Bangalore, said: “China has started to regulate the rare earth industry intensively since 2010. Its policy measures have heightened the consolidation process of the industry and the country has started to build strategic reserve of the minerals. These policies will provide China more power to fix the prices and control the supply in the international market.”

The paper also explained that as well as developing policy, the ministry is also responsible for developing the emerging business sectors that rely on the materials within the domestic market. By joining up policy development to cover the extraction of the materials and ensuring supply to Chinese industry, the country’s power in the sector is increasing.

Mancheri added: “China continues to implement a wide-ranging industrial policy of consolidating production, limiting exports and enacting environmental regulations.”

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