EU officials balk at China's newly raised rare earths quota

China's stranglehold on the global market for rare earth metals has resulted in many companies to seek out alternative suppliers. According to a published report, the country plans to double its export quota of the metals during this second half of 2011 - though officials assert the move will likely cause added headaches for businesses.

Bloomberg reports that following a World Trade Organization ruling that concluded China was breaking global trade regulations by limiting its raw material exports, the country announced it will raise its quota for 26 companies to 15,738 metric tons. In 2010 China's quota stood at 7,976 tons.

China's limit this year will now be 30,184 tons, which still represents only a slight drop from the 30,258-ton limit it set in 2010. While industry experts disagree on China's exact market share of global rare earth production, estimates range from 90 to 96 percent, according to he New York Times. Rare earths are an exceedingly critical component in the manufacturing of a myriad of industrial and electronic devices, including wind turbines and tablet computers.

While representing an increase from its previous estimates, the new quota will do little to satiate surging demand for rare earths, according to Matthew James, an analyst at Sydney-based rare earth developer Lynas Corp., which just inked a deal with the German engineering giant Siemens to supply rare earths.

The new figure is "below the requirements of the non-China market and will keep supplies tight," he said in an interview. "This situation could remain until new suppliers enter the market."

The European Union argued that China's latest quota will not affect the amount of rare earths shipped to its member nations. According to EU trade spokesman John Clancy, the addition of ferrous alloys will translate into more products competing for limited allowances.

"This is highly disappointing and the EU continues to encourage the Chinese authorities to revisit their export restrictions policy to ensure there is full, fair, predictable and non-discriminatory access to rare-earth supplies as well as other raw materials for EU industries," he affirmed in a statement.

For their part, Chinese officials contend that they have ordered businesses to reduce their production of rare earth metals because of the deleterious environmental effects of the mining process.