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Basic Materials

China says rare earth price gap based onquality, customs

Recommend 2 people recommend this. Be the first of your friends.

By Michael Martina

BEIJING, June 20 | Wed Jun 20, 2012 5:35am EDT

(Reuters) - China denied on Wednesday that it

interferes with prices on the global rare earthsmarket 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

orld Trade Organization that Beijing, which has a monopoly over world

supplies of the mineral, illegally choked exports while holding down prices

or domestic manufacturers.

Su Bo, a senior official at China's Ministry of Industry and Information

echnology, said that higherquality 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 thedefence 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.

Su sought to emphasise the environmental impact of mining by showing

large photos of barren hillsides apparently stripped during the mining

process.

In a similar case on raw materials in January the WTO ruled against China,

saying that environmental protection is only a valid reason to curtail

exports if China is giving the domestic and international markets equal

reatment.

Refining rare earths requires large amounts of acid, and also produces low-level radioactive

aste. Beijing is quick to note that other countries, notably the United States, have closed their

own rare earths refineries, citing pollution concerns.

The Chinese people believe, after years of supplying so much of the world's rare earths, that we

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