Rare Earth Prices Surge
As recently as last autumn, there were also ambitious hopes in Japan to recycle rare earths from electronics waste. Dowa Holdings tried then to come up with ways to separate rare earths at a recycling factory in northwest Japan but found the task significantly more difficult than recycling other, more widely available precious metals. The recycling factory is now recovering 19 other metals instead, including cobalt and lithium.
All of this has left the world even more dependent on China. The Chinese government last autumn showed a willingness to use that near monopoly as a trade weapon, halting shipments to Japan from late September to mid-November, during a territorial dispute over islands in the East China Sea.
Although Beijing has officially denied that it imposed a Japanese embargo last fall, China’s own trade data released since then show that its shipments to Japan suddenly fell to zero in October for rare earth metals, and to nearly zero for rare earth oxides — which are more processed chemical compounds. At the beginning of this year China reduced its rare earth export quotas to all countries, while raising export taxes on some rare earths to 25 percent, from 15 percent previously.
Since April 1, China has also raised taxes on rare earth mining companies to the equivalent of $8 for each kilogram of refined product; rare earths were previously taxed like many other nonferrous minerals in China, at less than 50 cents a kilogram.
One of the biggest questions hanging over the rare earths industry is whether the United States, the European Union and Japan will file a World Trade Organization case against China, challenging its export quotas and duties. James Bacchus, a former chairman of the W.T.O. appeals tribunal in Geneva, said that Chinese trade data shows a virtually complete halt in shipments to Japan last autumn could be cited to buttress any W.T.O. filing by rare earth-importing countries.
China denies violating the W.T.O. ban on export restrictions, saying that it qualified for an exception to the ban for environmental protection and conservation of natural resources. But China has done little to restrict its own industries’ consumption of rare earths, usually a prerequisite for invoking an environmental defense.