China says rare earth price gap based on quality, customs

Wed Jun 20, 2012 5:38am EDT
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By Michael Martina

BEIJING (Reuters) - China denied on Wednesday that it interferes with prices on the global rare earths market amid a trade dispute with other major economies, saying product quality variations account for the price gap between the metals it produces for export and domestic use.

In March, the European Union, United States and Japan complained to the World Trade Organization that Beijing, which has a monopoly over world supplies of the mineral, illegally choked exports while holding down prices for domestic manufacturers.

Su Bo, a senior official at China's Ministry of Industry and Information Technology, said that higher quality demands by foreign firms and customs costs - not a decree from Beijing - partly explained the steeper prices paid by foreign companies.

"It's like an article of clothing. It could cost 10,000 yuan or 1,000 yuan, depending on the product quality," Su said, citing industry experts.

Still, Su stopped short of a full explanation for the price difference that has upset trading partners.

"We need to search for an answer, because our government has never interfered with market prices," he told a press briefing.

Rare earths are key elements in producing modern technologies from iPhones and disk drives to wind turbines, as well as components for the defence industry.

China, which accounts for about 97 percent of world output of the 17 rare earth metals, imposes strict export quotas in what it says is an effort to curtail environmental pollution and resource exhaustion.   Continued...

Labourers work at a site of a rare earth metals mine at Nancheng county, Jiangxi province March 14, 2012. REUTERS/Stringer