China piling up rare earth reserves to tighten monopoly

by Commodity Online

World’s largest rare earths reserves holder, China is reported to have building up on its reserves to gain more control over prices, said Wall Street Journal.

According to WSJ, details of the stockpiling plans haven't been made public.

Storage facilities built in recent months in the Chinese province of Inner Mongolia can hold more than the 39,813 metric tons China exported last year, the newspaper said.

Rare earths are a group classified as 17 elements and sometimes are called "21st Century gold" for their importance in such high-tech applications as laser-guided weapons and hybrid-car batteries, the report said.

According to a report issued by the US Geological Survey in November, about 36 percent of the world's reserves of the metals are in China. The country currently controls around 95 percent of global supply of rare earth metals.

China controls about 95 per cent of the global trade for the 17 minerals that collectively make up the rare earth metals market.

The metals, prized for their special chemical or electromagnetic properties, are used in making mobile phones, batteries for hybrid cars, wind turbines, flat-screen televisions and other high tech products.

With the prices of rare earth metals rising on average by about 130 per cent last year, mining companies in countries such as Australia have stepped up efforts to extract the minerals.

But according to the Wall Street Journal, a new mine could take a decade to develop, so the processing of rare earth elements will remain concentrated in China for years.

Last month, China brought 11 rare earth mines under state control as Beijing consolidated the industry a move analysts said could drive up prices of the elements.

In December, China also tightened control over the metals by slashing quotas for overseas shipments by some 35 per cent for the first half of 2011, as well as hiking export taxes.

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