China has taken a step to further tighten its grip on the world’s supply of rare earth minerals by reducing its number of mining permits by 40%. The Ministry of Land and Resources announced the new restrictions on rare earths, necessary minerals for the production of mobile phones, hybrid car batteries, and other modern tech products, to decrease from 113 to 67 mining permits. The ministry hasn’t given an explanation for Wednesday’s announcement, but it could be seen as further action against Japan as tensions continue to rise over the territorial islands in the East China Sea.
The Chinese government has been continuously seen as trying to restrict the production and export of rare earth minerals in order to monopolize profits on the industry. The markets of the U.S., Japan, and Europe have little options for harvesting the valuable minerals other than China, for while they are believed to have roughly 30% of the world’s supply, they maintain 90% of production. While these newly imposed limits aren’t targeted at any market specifically, the last time tensions between Japan and China flared in 2010, Beijing temporarily halted all rare earth exports to Japanese buyers.
The restrictions will also hurt the U.S. and Europe as those markets want to fight unemployment by increasing the exports of products that use rare earth minerals, notably flat-screen TVs and hybrid cars. China’s controls have been brought up at the World Trade Organization (WTO) recently, but the Beijing government says they are trying to reduce environmental damage, and are still acting within WTO rules. Japan has recently formed an agreement with Vietnam to help with harvesting minerals in exchange for mining technology and equipment, therefore helping to lower the reliance on China.
[via ABC News]