China abolishes quotas for rare-earths

China has instituted a system of export permits for rare-earth metals, which are used in high-tech goods such as mobile phones, official media reported on Monday.

The previous rare-earth export quota system was abolished, Shanghai Securities News said, citing a statement from the Ministry of Commerce (MOC) on December 31, 2014.

Under the new system, export permits will be required, but the permits will be issued whenever a valid trade contract is presented, according to MOC.

China currently provides more than 90 percent of global rare-earth production, a term covering 18 metals vital for the production of smartphones, hybrid car batteries, wind turbines, steel and low-energy light bulbs.

China started the rare-earth export quota system in 1998 as resources were wearing out and environmental costs were also huge. In 2010, China reduced its annual rare-earth export quota, which has caused complaints from major consumers for the metals like the US and the European Union.

Media reports said that the US has greatly reduced its own rare-earth exploration in the past two decades with supplies from China.

Despite the fact that total rare-earth exports from China never reached the annual quota limit, a ruling from the World Trade Organization (WTO) in August said that the quota system was not in accordance with China's promises made when it entered the WTO.

Experts said that the abolishment of the quota system could help to curb smuggling, and rare-earth prices are also expected to rise under the new system.

China has raised environmental and production standards in recent years and encouraged big State firms to take over smaller private producers to improve efficiency.