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China cuts mines vital to tech industry

By Kevin Voigt, CNN
August 8, 2012 -- Updated 1130 GMT (1930 HKT)
STORY HIGHLIGHTS
  • State media: China will cut production of rare earths by 20%
  • China produces more than 90% of the minerals, which are vital for technology makers
  • Officials: Cuts necessary for environmental reasons, industry consolidation
  • U.S., Japan and EU have filed complaints with WTO against China on rare earths trade

Hong Kong (CNN) -- China will cut production of rare earths -- minerals vital for technology makers worldwide -- by 20%, a move that threatens to inflame trade tensions between Beijing and Washington.

Rare earths are 17 minerals with magnetic and conductive properties that are used in most of today's electronic devices, including flat-screen televisions, smart phones, hybrid cars and weapons. Nearly all of the world's supply of rare earths comes from China.

China changed production rules, which will close down one-third of the nation's 23 mines and about half of 99 smelting companies, Jia Yinsong, director of the ministry's rare earths office, told China Daily Wednesday.

U.S. military's rare earth concerns

China implemented the rules to improve environmental conditions and help consolidate the industry, officials said. The new regulations boost the minimum annual output at mines to 20,000 metric tons and 2,000 tons per year for smelting operation -- a move which will weed out smaller operations.

Minerals dispute threatens tech industry
China hoarding rare earths material?

The U.S., Japan and the European Union have complained to the World Trade Organization that China's rare earths export restrictions violate trade rules.

WTO case against China over rare earths announced by Obama

The minerals include cerium, neodymium, dysprosium, tungsten and molybdenum. Tungsten, for example, is used in electronics, automotive, aerospace and medical technologies. China produces 91% of the world's tungsten. Molybdenum is a metallic element used for filaments in light bulbs. China produces 36% of the world's molybdenum.

Rare earths are not actually "rare," and can be found in other countries - including the U.S. - but are difficult to mine safely. About a third of the world's rare earth deposits are in China but the country controls more than 90% of production, in part due to its lower labor costs and less stringent environmental regulations.

What are rare earth minerals?

CNN's Irene Chapple contributed to this report

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