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Tree-hugging Chinese throttle rare earth production

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Internet Security Threat Report 2014

Bad news for the technology supply chain – China has decided to cut back on its mining of the rare earth minerals essential to the production of a vast range of hi-tech kit.

Deputy IT minister, Su Bo, reportedly told an industry seminar in Xiamen that the decision was taken because China now wants to promote sustainability in its mining practices (cough, splutter).

However, in a week that saw the US agree to export 46 high-tech products to China to encourage a level playing field between the two countries, many will see the Chinese stance as anti-competitive and protectionist in the extreme.

The European Union, Japan and the US have already complained to the World Trade Organisation several times over China’s export restrictions on the materials.

The problem boils down to the fact that China has a 97 per cent global share of the rare earths, which are essential to the production of a range of tech kit from hard drives to LED, LCD and plasma displays.

Critics have argued that China is deliberately making exports of the materials scarce to drive up costs and force manufacturers to locate their production plants within its borders, closer to source.

China’s state-run CNTV reported that the authorities have suspended the issuing of new mining licenses and imposed production caps in a bid to cut down on large scale mining in the sector.

"We have never asked any company to set the price we want. Prices of over 97 per cent of our rare earth products are market oriented," Su is quoted as saying.

"Rational exploitation of rare earth should meet environmental standards, and follow a sustainable growth path, not large-scale mining activities. Improper exploitation will also undermine the value of rare earth."

Whether this latest tactic - playing the green card - will work as the WTO considers what action to take, remains to be seen.

However, the whole technology industry would certainly sleep a little better at night if some new deposits of rare earth minerals were found outside of China. ®

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