Rare earth shortages leave global industry reliant on Chinese supplies  Rare earth metals are an exceedingly important component in the production of electronics like smartphones and personal computers. China commands a veritable stranglehold on the international supply of the metals, controlling as much as 95 percent of global production. Dwindling stockpiles and burgeoning global demand have coalesced to send prices skyrocketing in recent months.

The New York Times reports that world prices for rare earths have surged 100 percent over the past four months - compounding the fourfold jump in prices that occurred during 2010. With its grip on the market, China moved last year to cut off exports to Japan after a contentious naval dispute, and later the U.S. and Western Europe as the Asian country moved to shore up domestic supplies and trim back production.

According to Chinese officials, the scaling back of rare earth production is not a strategic geopolitical maneuver, but rather a push by the country to rein in its greenhouse gas emissions. However, China's growing economic might concerns some industry watchers, who contend that a dearth of rare earth sources is causing an uptick in global prices, while also giving China undue influence in determining prices.

Though consumers haven't had to absorb the rise in rare earth prices - yet - there are portents of coming price hikes. Toyota, for example, uses a kilogram of the rare earth neodymium in the production of each Pruis model, and to offset mounting costs the globe's biggest automaker has steadily raised prices on the hybrid.

Still, plans to launch what would serve as the largest rare earth mine in the world in Malaysia are on hold as bureaucratic red tape delays the mine's opening. Currently, the Malaysian government is investigating how the facility would dispose of low-level radioactive waste that the plant would generate each year. Public protests have also been held to prevent the mine from operating as residents fear the environmental toll poses a public health threat.

Rare earth mining has turned into such a contentious political issue that countries throughout the globe are wary of granting permits to companies seeking to mine the substances. Toyota Tsusho, a materials purchasing unit of the automaker, has faced a complex regulatory system in Vietnam, where it had hoped to open such a facility.

The unwillingness of other countries to take on rare earth production has made businesses around the globe more reliant on China, worrying analysts as the country has shown a willingness to use its market power to control supplies. For its part, China has raised export taxes on rare earths to 25 percent from 15 percent, and has scaled back production. The government has also raised taxes on rare earth miners, levying a charge of $8 on each kilogram of refined product.

Now, analysts await to see whether the U.S, Japan and the European Union move to file a suit against China with the World Trade Organization (WTO). Former WTO appeals tribunal chairman James Baccus told the Times that Chinese data from last year indicating a complete halt in shipments to Japan could be used to bolster the case against China's policies.

Nonetheless, China has repeatedly denied allegations that it is using its market clout to control prices and supplies to other countries. Chinese policymakers affirm that export taxes and other restrictions to production were implemented with the sole purpose of reducing the environmental toll rare earth mining causes. Global trade analysts, though, aren't buying the argument, citing China's lack of domestic consumption restrictions, which historically precede any export bans.
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