Rare earths in China to rally amid slowdown

Rare earths prices in China will extend their rally in China as the government continues to restrict supply, outweighing the effects of slowing growth, Bloomberg reported, citing a report by Guotai Junan Securities. The report argued that delays in projects in the US and Australia will leave China in its dominant position as the world’s largest producer of the strategic resources until 2013. Beijing has severely restricted the production and export of rare earths – which are used in guided missiles, wind turbines and hybrid cars – which has pushed prices up and sparked concerns among its overseas trading partners that China is abusing control of the elements to protect domestic industries. Prices for some of the most popular rare earths hit all-time highs in Shanghai on June 3. The State Council also announced in May that taxes on mined rare earth metals will be increased by “a big margin.” At the same time, authorities are rushing to consolidate rare earths miners to increase their control over the industry.