China launches trading platform for rare earth metals

China on Wednesday launched a trading platform for rare earth metals, state media reported, as it moves to boost its pricing power over the strategic resources for which it dominates global production. China's leading producer of rare earths, Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co., started the platform in cooperation with nine other companies and institutions, Xinhua news agency said. Xinhua said that the facility is located in the city of Baotou in China's resource-rich northern region of Inner Mongolia, described as containing over half of global light rare earths output. Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co. could not be reached for comment. China dominates production of the metals -- key elements in consumer electronics and other high-tech goods -- producing in excess of 90 percent of rare earths, though it only has 23 percent of global reserves, Xinhua said. Their strategic importance gained prominence in late 2010 when Japanese industry sources said China temporarily cut off exports amid a territorial dispute between the countries. China denied halting exports. A source close to the World Trade Organization (WTO) said last month that the body would investigate Chinese export restrictions on rare earths, after a request by the European Union, the United States and Japan. The US claims that China sets export quotas, duties and other restrictions that make the products increasingly expensive. China's WTO delegation said last month that the country's policies are meant to protect natural resources and achieve sustainable economic development, not to protect domestic industry. Zhang Rihui, vice general manager of Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-tech Co., said that pricing on the platform will be "transparent and consistent," according to China National Radio. The report said the trading centre will focus on physical trading in the initial stage with futures trading likely to be launched if operation of the exchange proves successful. Luo Renyuan, an analyst at Industrial Securities in Shanghai, said that China is aiming to increase its global influence in rare metal pricing. "The establishment of this trading platform is mainly to earn more say for China over the pricing of rare earth resources in the international market," Luo told AFP.