China's rare earth exports under watch: White House

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By Jijo Jacob | October 28, 2010 12:43 AM EST

White House spokesman Robert Gibbs said on Tuesday the U.S. is monitoring if China blocks rare earth exports to U.S. companies.

China had denied last week a New York Times report which stated that Beijing, which enjoys a brutal monopoly in the production of rare earth minerals, had halted some shipments to the U.S. in a fallout over Washington's probe into alleged Chinese subsidies for its green technology sector.

"We're monitoring to see whether or not what is happening on the ground is reflected in those reports," Gibbs said.

Gibbs also said the U.S. would bring up the country's concerns over Chinese rare earth export policy at the G20 leaders’ summit to be held in South Korea in November, if the national security and economic advisors thought the issue had to be taken up with China.

"I think we are likely to see (Chinese) President Hu (Jintao) on the trip at the G20," Gibbs said, according to a Reuters report.

"If it is something that the security and economic teams think is important...certainly, we wouldn't hesitate to bring it up".

There were reports earlier in the month that China had blocked rare earths exports to Japan following a diplomatic stand-off which resulted from Japan's arrest of a Chinese fishing boat captain near the disputed Senkaku Islands in September.

Though China has denied cutting off access to rare earths sources, there have been clear indications in the air that Beijing could recalibrate its rare earths policy on several grounds.

Beijing brought in restrictions on rare earths exports in order to maximize profit and support domestic high-tech companies. China's commerce ministry has said the country has the right to cut export quotas to preserve exhaustible resources.

Rare earths are indispensable for high-tech industries and are heavily in demand in defense systems, electric cars, wind generators, hard-disk drives, mobile communication, missile guidance and the like. The 17 rare earth elements are lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium.

Technically viable alternatives to rare earth materials are not known currently. China produces as much as 97 percent of rare earth elements globally.

Major importers Japan and South Korea are now seeking alternative sources of the rare earths needed in vast quantities for their staple high-tech industries, according to media reports.

Meanwhile, EU trade commissioner Karel De Gucht said on Tuesday the bloc should diversify mining sources in order to find alternative sources for rare earth minerals.

"This is going to become a very, very difficult problem if we don't find a way out," De Gucht said.

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