China to cut rare earth exports, disrupting supply chains

China accounts for roughly 95 percent of the global production of rare earth metals, the substances that are instrumental in producing, among other goods, automobiles and electronics. Recently, China's commerce ministry announced that it would cut its export quota of the metals, potentially causing supply chain disruptions around the world.

China has flexed its dominance in the production of rare earth metals before, cutting off supply to Japan following a naval dispute in September. In the first half of next year, China plans to cut its exports by 35 percent from 2009 levels, effectively limiting the global supply of the goods. Earlier this year, China raised export taxes on some of the most crucial rare earths to 25 percent from 15 percent.

In a statement on its website that announced the export reductions, China's commerce ministry gave no reason for the drop, but speculation persists that the country could be using its monopoly power in the field to hurt foreign competition in industries where the metals are used.

To combat the fall in Chinese exports and ensure that supply chains run efficiently, other countries are opening and reopening mines that produce the rare earth metals. Dudley Kingsnorth, a rare earth industry executive in Perth, Australia, affirms that such moves are becoming increasingly popular: "It’s only a matter of time before China is not the major supplier to the rest of the world."