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China not intending to maintain role as major rare earth supplier, prices to remain high

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BEIJING, Sept. 15 (Xinhua) -- China's top rare earth producer said on Thursday the country does not intend to maintain its role as the world's major rare earth supplier and it plans to shift focus to the domestic market.

"The country will gradually shift to a domestic demand-oriented path from the external demand-oriented path," said Li Zhong, vice president of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Holding Co.

Prices of rare earths are expected to stay at high levels during the rest of the year and the trend of tight supplies is irreversible, Li said at the ongoing Rare Earths 2011 conference that runs from Sept. 15 to 16.

China now produces more than 90 percent of the world's rare earth metals, which are vital ingredients for manufacturing an array of sophisticated products ranging from cell phones, wind turbines, electric car batteries and missiles.

The world's major rare earth consumers such as Japan and the United States have complained about China's tougher industry regulation, including falling export quotas and capped output, while the Chinese government repeatedly stated these policies were imposed in an effort to protect the resource and environment.

China set this year's export quota at 30,184 tonnes, slightly lower than 2010. The annual output of rare earths was capped at 93,800 tonnes this year.

Xu Xu, chairman of the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters, told the conference that he hoped "some other countries would share the burden of rare earth production" after China's decades of excessive exploitation.

China's rare earth reserves only account for about one-third of the world's total.

Tight supplies from China, rising demand and soaring prices have driven other countries to reopen their rare earth mines and look for alternative reserves outside China.

Although a diversified rare earth supply will inevitably lower China's competitiveness, it will also ease the country's burden, Xu said.

China's rare earth regulation policies will also make manufacturers shift their production to China, Constantine Karayannopoulos, president and chief executive officer of Neo Material Technologies Inc. said at the conference.

Meanwhile, continuously rising prices will encourage substitution and recycling of rare earth metals but discourage research that seeks new applications for the metals, said Dudley Kingsnorth, executive director of the Industrial Mineral Company of Australia Pty. Ltd.

According to Kingsnorth, China consumed 60 percent of the world's rare earth metals last year. The proportion is expected to exceed 70 percent this year.

He forecast the world's demand for rare earths would fall to 120,000 tonnes this year, from last year's 125,000 tonnes.

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