6:35 PM
By James Regan
SYDNEY | Wed Dec 29, 2010 7:44pm EST
SYDNEY (Reuters) - China's move to slash export quotas on rare earth minerals -- vital in a slew of high-tech products -- has raised fresh international trade concerns, and Japan's Sony Corp vowed on Wednesday to reduce its reliance on the minerals.
China, which produces about 97 percent of the global supply of rare earth minerals, cut its export quotas by 35 percent for the first half of 2011 versus a year ago, saying it wanted to preserve ample reserves. It also cautioned that it has not decided on the quotas for the second half of the year.
The little-known class of 17 related elements is used in numerous electronic devices and clean energy technology.
A European Commission spokesman said the European Union "notes the latest quota figures and expects China to respect its recent assurance of a guarantee of rare earth supplies to Europe." The United States, which earlier this month threatened possible World Trade Organization action over Chinese rare earth export restraints, voiced concern on Tuesday as well.
While Japanese giant Sony said China's move represented a hindrance to free trade, for other companies the Chinese action provided a boost.
Shares of Lynas Corp, which owns the world's richest known non-Chinese deposit of rare earth minerals, jumped more than 10 percent even though it will be at least a year before it is capable of mining any material from a new lode in Australia.
Other rare earth companies, including China Rare Earth Holding Ltd, Arafura Resources, Alkane Resources and Greenland Minerals and Energy Ltd, also gained between 8 percent and 10 percent.
Shares in Colorado-based Molycorp closed Wednesday's session on the New York Stock Exchange up 6.76 percent at $49.30. That was its second-highest close ever and represented a nearly 400 percent jump from the company's initial public offering price of $14 in July.
Molycorp owns a rare earth mine in Mountain Pass, California, which is scheduled to resume production next year after a 10-year hiatus.
"Any reductions China makes in its 2011 exports versus 2010 levels will only exacerbate the global supply shortfall of rare earths we can expect in 2011," Molycorp CEO Mark Smith said in a statement.
U.S. makers of high-tech products such as Apple Inc's iPads and various Japanese companies have been scrambling to secure reliable supplies of the minerals outside of China as Beijing steadily reduces export allocations.
While Sony does not import or buy rare earth elements directly, the minerals are crucial for the production of components used in its finished products. These include magnets, condensers, and abrasives for polishing LCD glass, company spokeswoman Ayano Iguchi said.
SONY MULLS OPTIONS
Sony, maker of Bravia brand flat TVs, Vaio PCs and the PlayStation 3 videogame console, will look for ways to cut its use of rare earth elements, including developing alternative materials, Iguchi said.
"We cannot welcome rare earth export controls or any restrictions that hinder the system of free trade," Sony said in an e-mail statement in response to questions by Reuters.
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