China to limit exports of ‘rare earth’ minerals vital to energy tech

China is planning new restrictions on the export of “rare earth” materials used in low-carbon energy technologies, a move that could stoke Capitol Hill fears about access to supplies and further inflame U.S.-China tensions over energy-related trade.

The state-owned China Daily, citing a senior Ministry of Commerce official, reported Tuesday that China will “further reduce quotas for rare earth exports by 30 percent at most next year to protect the precious metals from over-exploitation.”

“He added that the country is now facing the possibility that reserves of medium and heavy rare earths might run dry within 15 to 20 years if the current rate of production is maintained. Export quotas will continue to be axed in the first half of next year, said the source who declined to be named,” the story adds. 

China is the world’s dominant supplier of the materials that are used in a range of industries. They are key to the manufacture of energy technologies such as wind turbines and hybrid vehicles.

Accusations that China is blocking access to rare earths to benefit its domestic companies is among the matters under review in a wider U.S. investigation into China’s green-energy trade policies.

The United States Trade Representative announced the probe last week in response to a petition from the United Steelworkers union, which alleges a suite of Chinese subsidies and protections violate World Trade Organization rules.

“China uses export quotas, taxes, and licensing procedures to restrict exports of these minerals to users in the U.S. and other countries. These restrictions raise prices for manufacturers outside of China, lower prices for those within the country, and create a powerful incentive to shift production to China in order to secure necessary supplies,” states a summary of the Steelworkers’ 5,800-page petition to the trade office last month.

The move also comes as U.S. lawmakers and Obama administration officials are grappling with how to ensure availability of the materials.

The House passed legislation in late September to beef up Energy Department R&D, demonstration and application programs to create a secure supply. It also authorizes federal loan guarantees for projects to mine and develop rare-earth minerals. The vote was 325-98.

The Energy Department is already working on a rare-earth strategy that includes domestic development, greater re-use and recycling, and development of substitutes.