China’s ministry of commerce raised its rare earth minerals export quotas for 2012 to nearly 31,000 tons yesterday, up from just over the previous limit of just over 30,000 tons. The increase comes despite efforts by the government to stop production of the minerals by a number of small producers whose operations are said to damage the environment.
In March the U.S., the European Union, and Japan filed complaints with the World Trade Organization (WTO) accusing China of violating free trade rules by limiting exports of rare earth minerals which in turn raised prices and gave Chinese buyers an unfair advantage.
Chinese rare earth exports totaled just 18,600 tons in 2011, despite a quota of 30,184 tons. The government did not say how many tons have been exported so far in 2012.
Prices have fallen this year, due mostly to the slowdown in the global economy which has quenched demand for the minerals. U.S. producers Molycorp Inc. (NYSE: MCP), Avalon Rare Metals Inc. (NYSEMKT: AVL), and Rare Element Resources Ltd. (NYSEMKT: REE) are still gearing up to begin production in earnest.
Molycorp shares are up more than 6% today to $10.23 in a 52-week range of $9.56-$58.74. Just over 30% of the company’s float is short and the rise is likely due to some short covering.
The Market Vectors Rare Earth/Strategic Metals ETF (NYSEMKT: REMX) is down 0.24% today at $12.70 in a 52-week range of $12.18-$22.07.