Government officials and industry executives said they are discussing several measures, including a proposal to bring more byproducts under export limits and another to have separate quotas for light and heavy rare-earth metals.

While prices have softened recently, this month's average price in China of eight rare-earth metals tracked by Australia's Lynas Corp., was up threefold from March.

One of the suggestions being considered is to bring neodymium-iron-boron alloys, known by the chemical symbols Nd-Fe-B and 30% of which are composed of rare-earth metals, under existing export quotas, the officials and executives said.

Beijing since May has included ferroalloys that are more than 10% composed of rare-earth metals in export quotas. But under the current system, Nd-Fe-B alloys are considered processed goods, not raw materials, leaving them outside the quotas.

Last year, the government scrapped the 20% export duty on rapid-setting, permanent-magnet film, a type of Nd-Fe-B product, "to support the development of the permanent-magnet industry." The government maintained a 15%-25% tariff on other rare-earth metals and products.

People in the industry have said that some Nd-Fe-B alloys that are exported have only minor processing, specifically to sidestep the quotas. "Foreign companies are more willing to import Nd-Fe-B alloys," said an executive with a state-run rare-earth processing company. "For example, rapid-setting permanent-magnet film is more like raw materials as it's just roughly processed," he said.

While shipments of rare-earth byproducts rose in the first half, exporters reached only 55% of the export quota. China exported about 8,000 metric tons (8,800 short tons) of rare-earth ores, metals and compounds in the half, according to customs data supplied by Economic Information & Agency, which is based in Hong Kong.

Source: Wall Street Journal

Related Links: China Rare Earth Exports in June 2011

China Releases Export Quota of the Second Batch of Rare Earths in 2011