China has announced that it will cut down the amount rare earth metals that it will export during the first half of 2011. The cut is estimated to be more than 10%. This decision could in turn affect many businesses across the globe since the rare metals play an essential part of the production of many high-tech products. China currently produces 97% of the world’s overall production of rare earths which are key components to devices such as cell phones, computer drives, and hybrid cars.
The projected numbers of rare metals that China will allocate to companies in the first half of the new year are lower than the numbers from the first half of the year in 2010. It is estimated that metal exports of 16,304 tons among 22 companies in the first half of 2010 will be cut down to 14,446 tons among 31 companies in the first half of 2011.
Many countries are shocked at China’s announcement and have been forced to search for alternative sources for the rare earth metals. Some companies such as Molycorp, Inc. in the United States and Thompson Creek Metals Company in Canada have gone as far as considering opening or reopening rare earth mines.
We are really unsure of the main reason that China has decided to do this. Some sources say that China has started to reduce their export quota over the years to cope with the increasing demand for the metals back at home. While others say that China is cutting down on the exports due to environmental concerns. Whatever the reason may be, many companies will be hugely affected by this reduction since China has been their major source for these metals.
Hong Ho
