Premier: China won't block rare earth exports

[phantom power]

China produces 97 percent of the global supply of rare earths, and experts forecast that annual demand could exceed 200,000 tons by 2014, far exceeding current production level of 124,000 tons a year.

"It is necessary to exercise management and control over the rare earth industry, but there won't be any embargo," the China Daily quoted Wen as saying.

China has denied it was halting exports, but Japanese trading firms said shipments stopped around Sept. 21, held up at Chinese ports by increased paperwork and inspections. That came after Japan arrested a Chinese fishing boat captain whose trawler collided with two Japanese patrol boats off disputed islands in the East China Sea.

Concern about rare earth supply had been brewing long before September's restrictions to Japan. To cope with growing demand at home, China has been reducing export quotas of rare earths over the past several years. In the second half of this year, the government has capped overseas shipments at 7,976 tons, down 49 percent from the first half, according to figures from China's Ministry of Commerce.

Shaken by the potential threat of supply disruptions to its manufacturers, Japan is considering becoming a global center for rare earth recycling and is partnering with Mongolia to develop new rare earth mines.

http://news.yahoo.com/s/ap/20101008/ap_on_hi_te/as_china_rare_earth