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China stops production of rare earths to boost prices

China stops production of rare earths to boost prices

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Rare Earth Minerals
Rare Earth Minerals

China's Bautou Steel, the world's largest producer of rare earths, announced Thursday that it would stop production for one month and begin buying in order to drive up prices. Rare earth elements used in electronics such as TVs, hard drives, and rechargeable batteries are common, but concentrated deposits suitable for extraction are not. The state-controlled company's move isn't entirely unexpected — last year China violated international trade rules and imposed export restrictions on rare earths, driving prices through the roof.

Although China only holds a third of the world's rare earth deposits, it seized control of 97 percent of the market by undercutting all competitors' prices in the 1990s — Baotou Steel accounts for more than half of China's production. Prices have recently fallen roughly 30 percent because of economic uncertainty in Europe and the United States, prompting China to once again flex its monopoly muscles. However, with efforts to resume costly mining operations in the US, rare earth recycling in Japan, and an enormous deposit recently discovered under the Pacific, China's hold on the market may not last.