China’s bid to monopolise the world market in rare earth metals has been ruled illegal by the World Trade Organisation (WTO).
Around 90% of the market in rare earths is controlled by China – metals vital for making components for electronic devices for consumers, industry and defence.
The Chinese government set strict rare earth export limits in 2010, explaining the action was aimed at protecting reserves and cutting down on pollution.
The prices of some of the metals rocketed in price, triggering a fraudster’s delight as scammers tried to sell shares in rare earth mining and refining firms to unwary investors.
Unfortunately, although rare earths are designated ‘rare’, they are common in some areas and are sold by the ton – amounts way beyond the financial resources of the average individual investor to buy.
Trading laws breached
Governments in Europe, the US and Japan argued China was manipulating the market to push up the price of their goods containing rare earths. China refused to budge, so the European Union, US and Japan took their gripes to the WTO.
After a protracted investigation, the WTO agrees China’s caps on rare earth exports break international trading laws and has ordered the barriers be torn down on the grounds that China has engineered an artificial advantage over competitors in other countries.
China may appeal the ruling.
The Chinese has reserves of around a quarter of the world’s rare earths. Other large deposits are in Australia, Asia and Africa.
“China has lost on every aspect of this case,” said a Foreign & Commonwealth Office spokesman.
“Although an appeal has been lodged against the ruling, most observers consider this will be lost, but the WTO has three months to make a final decision about what to do.”
Not so rare earths
Many of the governments involved considered China knew that the outcome of the case would be against them and that the rare earth industry was economically insignificant in the scheme of the country’s GDP.
“This is China’s chance to put things right and to change business and green policies for mining and processing rare earth metals to cut pollution,” said the FCO spokesman.
Rare earths are a group of similar elements that occur together in geology. They are abundant rather than rare, but are difficult to process and separate.
The elements are important in electronics, from missile guidance systems to iPhones.
For technical overview of rare earths and their uses, see the British Geological Survey web site
