China counters U.S., says exports limited to protect rare earths

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China says its prized rare earths, minerals needed to make smartphones, televisions and hybrid cars, are dwindling after decades of excessive mining. In a new government report that argues for continued controls, China said the industry has been blighted by illegal mining, smuggling and severe pollution.

The United States and other countries have lobbied against Chinese restrictions on exporting rare earths, saying they artificially boost prices and put pressure on companies to relocate their operations to China. The Obama administration took the first step in trying to stop those restrictions in March, requesting consultations at the World Trade Organization over the dispute.

‘We’ve got to take control of our energy future, and we cannot let that energy industry take root in some other country because they were allowed to break the rules,’ President Obama said in March.

China counters that it is safeguarding its resources and the Earth. The new white paper from the Chinese Cabinet, published on the official New China News Agency on Wednesday, was presented as a counterpoint to countries fretting over the rare earth industry that it said were “doing a lot of guesswork and conjuring up many stories.”

Far from being inflated, prices for rare earths have lagged behind their true value, the report asserts, and the rare minerals must be controlled to protect the environment and prevent their depletion.

“The state sets a reasonable quota for annual rare earth exports that basically satisfies the normal demand of the international market,” the report says. It adds, “China opposes politicizing the rare earth issue, and is willing to strengthen dialogue and cooperation with other rare earth producers.”

Rare earths have grown more prized with the rise of technologies such as hybrid batteries and flat-screen televisions, which are made using 17 rare minerals. China dominates mining and processing of rare earths worldwide, raising concerns elsewhere about its power over the market. In the report, China says it supplies more than 90% of the global market for the coveted minerals.

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-- Emily Alpert in Los Angeles