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China cuts rare earths export quota

China said Tuesday it is cutting rare earths export quota by 11 percent in the first round of permits for 2011, threatening to worsen a global shortage of the minerals needed for smartphones, hybrid cars and guided missiles.

The government allotted 14,446 metric tons of rare earths exports split among 31 companies, the Ministry of Commerce said in a statement. That compares with the first round this year of 16,304 tons and the second round of 7,976 tons, according to previous ministry statements. The government usually issues two rounds of export quotas every year.

China, which accounts for more than 90 percent of world supplies, slashed export quotas by 72 percent in the second half of this year, sparking a surge in prices. Japan, the biggest user, has sought alternative supplies, with companies including Hitachi Metals and Toyota seeking cooperative ventures at home and abroad to secure the minerals.

"This is in line with government officials' comments that we need to protect the environment and resources," said Chen Jiazuo, an analyst at metals researcher Beijing Antaike Information Development Co. "Controlling domestic production capacity, output and exports will continue to be the theme."

Last year, China's government clamped down on its rare earths industry, setting production quotas to bolster prices. China said in July this year it would reduce export quotas in the second half to supply its own electronics industry and overhaul a mining sector blamed for causing widespread environmental damage.

"As China has advanced technologies in rare earths production, companies can seek cooperation to develop mines abroad," Antaike's Chen said.

The Asian country will also raise export taxes for some rare earths elements to 25 percent next year, the Ministry of Finance said this month.

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