Regulator refutes WTO rare-earth investigation

China's recent steps to regulate the rare-earth industry are in line with World Trade Organization rules and are meant to protect the environment, the country's top industry regulator said on Wednesday.

China is now the subject of a WTO investigation into allegations that it has set strict controls on exports of rare-earth metals, 17 elements used in a variety of technologies. On March 13, the United States, the European Union and Japan complained to the WTO that China's rare-earths regulations were harming competing industries in their countries.

"China will respond in this case," said Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology.

"All these measures, such as export quota controls, are meant to diminish environmental risks that have resulted from the disorderly development of the rare-earth industry."

Zhu said not regulating the industry will only bring more harm to the environment.

China exports more rare earths than any other economy in the world, supplying more than 90 percent of those materials sold in the international market. That's even though it currently has about 30 percent of world reserves of rare earths, a proportion that has dropped greatly from just two years ago, when it held 50 percent.

According to US Congressional Research Service's mineral commodity summaries, the US held about 12 percent of world rare-earth reserves in 2010.

"China isn't manipulating the prices of rare earths, and only half of its (export) quota was met last year," he said.

Zhang Anwen, Chinese Society of Rare Earths deputy secretary, said other countries' requests are "unreasonable", and the commodities' increasing prices reflect market conditions. Zhang said he hopes the prices will eventually take into account the possibility of environmental pollution.

Zhu said China's regulations, which include production caps, export quotas and stricter emission standards, were adopted after a full consideration was made regarding "the ability of the environment to ensure effective supplies of rare-earth metals".

According to the Ministry of Industry and Information Technology, processing one metric ton of rare earths produces about seven tons of strong acid.

"The recovery rate for rare earths is less than 50 percent," Zhu said. "In some illegal mines, the rate is as low as 20 percent. So if we can't control and manage illegal activities, there will be significant damage to plant life and underground water supplies."

China is ready to cooperate with other countries in recycling rare-earth metals and in researching and developing mining technology and expertise, Zhu added.