Report: China to cut rare earth export quotas by 11% in 2011

China is expected to announce the formation of a rare earth industry group in May 2011. This organization will reportedly be tasked with guiding the nation's domestic rare earth industry and handling price negotiations with foreign buyers interested in obtaining the precious materials. The proposed China Rare Earth Industry association will include representatives from domestic producers and requires the State Council's approval, but sources close to the matter seem confident that the group will be assembled within a timely manner.

Meanwhile, China slashed its first batch of rare earth export quotas by 11 percent for 2011, setting the limit at 14,446 tons. Since China supplies in excess of 90 percent of the world's rare earth metals, the move to curb exports has caused prices to soar and has led to quite an uproar. Automakers are concerned that a shortage in vital rare earths used to manufacture components for hybrids and electric vehicles will impact production levels. Furthermore, the U.S. is considering filing a World Trade Organization complaint against China for potentially violating international trade laws. With China dominating the industry, this rare earth battle is bound to become more brutal before it possibly gets resolved. Hat tip to David D!

[Source: Shanghai Daily]