Is China building a rare metals cartel equivalent to OPEC? Analysts began contemplating this possibility last month when a draft report by the Chinese government surfaced stating that China planned to ban the export of rare earth minerals. Last week, Chinese officials stepped back from this claim and said they were only planning to reduce export quotas of rare metals to 35,000 tons per year from 53,000 tons in 2008. World demand is currently over 110,000 tons and expected to grow to 188,000 tons by 2012, according to the U.S. Geological Survey (USGS). Since China is responsible for 97% of the world’s current rare metals production, fears have developed that global green technology will be held hostage since hybrid cars, cell phones and wind turbines all require rare metals. Moreover, the number of uses of these metals keeps rising.
To further compound the suspicion that China wants to control the world’s supply of rare metals, China has recently signed deals to buy large stakes in two Australian rare metals mines that could start production within one to two years. It is estimated that these two Australian mines could have a combined production of 25% of current global output, according to the World Business Council for Sustainable Development. Additionally, China tried—unsuccessfully—to buy the U.S. Mountain Pass mine on two occasions.