BEIJING—China moved to tighten its control over rare-earth metals Thursday by expanding its export-quota system and imposing higher taxes on the minerals, which are used in such high-tech applications as laser-guided weapons and hybrid-car batteries.
It also said it will get tough with companies that resell export quotas and won't approve any new projects—or the expansion of existing ones—in rare-earth separation over the next five years.
The measures were announced separately by the State Council, or cabinet, and the Commerce Ministry in an apparently coordinated offensive in a sector that has become highly politicized.
China, which supplies around 95% of the world's rare-earth metals, has been tightening its control over the sector by raising the threshold for entry, imposing stricter environmental standards and slashing export quotas. First-half 2011 quotas total 14,508 metric tons, down about 35% from the same period last year, according to the Ministry of Commerce.
These measures have boosted rare-earth prices and made export quotas much more valuable.
In the latest move, Beijing said it is raising the tax on light rare-earth ores to 60 yuan ($9.22) per ton, from a range of 40 fen to 30 yuan per ton, as of April 1, while lifting the tax on heavy ores to 30 yuan per ton, also from a range of 40 fen to 30 yuan per ton.
"[China will] greatly increase rare earth taxes and refine its pricing mechanism to reduce the excessive profits in the rare earth mining industry," the State Council said.
China will also raise the threshold for companies applying for export quotas, though it didn't say whether this will reduce the number of qualified exporters. China granted quotas to 22 Chinese companies and 10 foreign companies this year.
The Commerce Ministry said it will start imposing export quotas on ferroalloys containing more than 10% rare-earth minerals by weight, effective Friday.
This year, China began imposing 25% tariffs on exports of alloys with more than 10% rare earth content.
Prior to the latest announcements, China had issued export quotas for rare-earth primary products, including minerals and oxides, but its quotas didn't include alloys.
Rare earth alloys include rare-earth ferrosilicon—with 17%-37% rare-earth content—which is used as an additive in steel and iron smelting, and magnesium rare earth, which contains 2%-10% of rare-earth elements yttrium and gadolinium and is used in the aviation, automotive and defense sectors.
Rare earths, comprising 17 elements, are usually categorized into two kinds—heavy rare earth, also called ion-absorbed rare earth, which is abundant in southern China, and light rare earth, which is found in northern China.
Heavy rare earths are more valuable, giving exporters an incentive to ship overseas for higher returns.
The State Council said it "clearly forbids" the resale of quotas and has promised to improve the system of allocating quotas. People familiar with the situation have said previously that some companies with export quotas make big profits by re-selling export quotas.
Beijing also pledged to combat illegal rare-earth mining and mining above quota levels, as well as improve the export-monitoring system to stamp out smuggling.
China is also building strategic stockpiles of rare-earth metals, an effort that could give Beijing increased power in influencing global prices and supplies.
The State Council said it will halt approvals of rare-earth separation projects in the next five years and "resolutely ban" capacity expansions at existing plants.—Yajun Zhang