Decision complies with WTO ruling
China's Ministry of Finance (MOF) announced Thursday that the export tariff for rare earths will be removed, a move that complies with a ruling by the World Trade Organization (WTO) and that will lead to a drop in rare-earth prices, experts said.
China will scrap export tariffs for a group of mineral products including rare earths, and the adjustment will come into effect on May 1, according to a statement released on the MOF website Thursday.
Currently, there is a 15 percent to 20 percent export tariff on rare-earth products, according to the statement.
In addition to canceling the tariff, China in January abolished export quota restrictions for rare-earth exports.
China scrapped the export quota and tariff for rare earths in order to comply fully with a WTO ruling issued last year, Chen Zhanheng, vice secretary-general of the Association of China Rare Earth Industry, told the Global Times Thursday.
The WTO announced a final ruling in August 2014, which said that China had broken WTO rules by imposing an export tariff and quotas on rare earths, tungsten and molybdenum, as alleged in 2012 by the US, the EU and Japan.
Rare earths are a group of highly valued minerals used in the manufacturing of high-tech products ranging from smartphones to airplane equipment.
According to official data, China exported 28,000 tons of rare earths in 2014, up 27.3 percent year-on-year, but total revenue from the exports dropped 35.6 percent to 2.3 billion yuan ($371 million), news portal chinanews.com reported Thursday.
Japan is the biggest importer of China's rare earths, followed by the US, the report said.
With the tariff and quota removal, the rare-earth export volume will grow but prices will drop, Liu Xinwei, an analyst with consultancy Sublime China Information Group, told the Global Times Thursday.
The rare-earth industry is burdened by oversupply in the domestic market, so it will benefit from the new policy, news portal cnstock.com reported Thursday.
But China may increase taxes on rare-earth mining, which could lead to a price rise, the report said, predicting that there will be more policies released in the first half of 2015 to regulate the rare-earth industry.
China, which has 23 percent of the world's rare-earth reserves, supplies 90 percent of the rare earths in the international market, ensuring continued development of the world's high-tech industries, despite the massive environmental and resource pressure from rare-earth mining, Zhang Anwen, vice secretary-general of the Chinese Society of Rare Earths, told the Global Times in a previous interview.
China appealed against the initial WTO ruling on the case in March 2014, but faced with the final ruling, "China chose to remove the tariff and quota to show that China respects international rules," Liu said.
The decision will not lead to more rampant mining because China has other ways to manage rare-earth production, Liu said, adding that China has started integrating its rare-earth companies into six major groups.
Su Bo, vice minister of Industry and Information Technology, said in January that all Chinese rare-earth mining companies would have to be integrated into six major groups before the end of 2015, the Beijing-based China Securities Journal reported on January 29.
Moreover, China has adopted strong measures in recent years to crack down on illegal rare-earth mining and transactions, Liu noted.
