China, which supplies more than 90 percent of the world's rare earth minerals, will raise the export taxes for some elements to 25 percent 2011, the Ministry of Finance said.

The move is an increase from the 15 percent temporary export tax on neodymium, used in batteries for hybrid cars including Toyota Motor Corp.'s Prius. Lanthanum, also used in hybrids, and cerium, used for polishing semiconductors, were not taxed in 2010, and will be taxed at 25 percent in 2011, the ministry said on December 15, 2010.

Rare earths are 17 chemically similar elements including neodymium, cerium and lanthanum. The price of neodymium oxide, also used in magnets in BlackBerrys, has surged more than four- fold to $88.5 a kilogram from $19.12 in 2009 because of rising demand and reduced supply from China, according to Sydney-based Lynas Corp., which is building a A$550 million ($542 million) rare earths mine in Western Australia.

The tax increase "might have been a bit too draconian and inflexible," said Guan Anping, chief consultant at Beijing Duebound Law Office and a former trade official. "A gradual reduction of exports would make more sense and allow those who previously relied on China to find alternative sources."

Rising Prices, Demand

Demand growth for neodymium and dysprosium may be around 15 to 20 percent per annum, Damien Krebs, metallurgy manager of Australia's Greenland Minerals and Energy Ltd. said in an interview on Nov. 10. Neodymium is also used in mini hard drives in laptops and headphones in Apple's iPod.

Prices of cerium oxide climbed sevenfold in the six months to October, London-based Metal-Pages Ltd., which tracks rare- earth prices, said Oct. 23.

China slashed export quotas for rare earths by 72 percent in the second half of this year, which sparked a surge in prices and highlighted global dependence on Chinese shipments. Government agencies are still working on 2011's export quota, commerce ministry spokesman Yao Jian said on December 15, 2010.

In a study of 14 rare-earth elements, the U.S. Energy Department found that supplies of dysprosium, which is used to make wind turbines and electric cars, may fall short of demand, David Sandalow, assistant secretary for policy and international affairs said on Dec. 15 in Washington.

China's export tax for dysprosium will be kept at 25 percent next year, and the same with terbium, according to the statement of China's finance ministry.

It takes seven to 10 years to obtain permission to open a new mine in the U.S., the longest among the top-25 mining countries, the Energy Department said in a report on Dec. 15. The department plans to begin research into critical materials and to work with Japan and nations in Europe to lower the risk of supply disruptions.

2010-12-17 09:02:26