According to an April 9th report from Associated Press, China has set up a rare earths industry association to fend off trade complaints and help regulate the sector that is critical to global high-tech manufacturing. The Ministry of Industry and Information Technology announced the group’s founding on Sunday, April 8th, saying it would coordinate mining, smelting and processing and seek to form a “reasonable price mechanism” for the materials, used in many high-tech applications. It said the group would help coordinate China’s response to rare earth trade disputes such as a complaint alleging unfair market manipulation that was filed in March by the US, EU and Japan at the World Trade Organisation.

Rare earths are used to make goods including hybrid cars, weapons, flat-screen TVs, mobile phones, mercury-vapour lights, and camera lenses. China has about a third of the world’s rare earth reserves but supplies about 90% of what is consumed. Beijing has imposed limits on rare earths production and exports, citing a need to impose order on an unruly domestic market and to reduce environmental damage, raising protests from Japan, the US and other countries that rely on supplies from China. A key aim is to rein in wide swings in prices. Officials have denied accusations Beijing is using its quasi-monopoly on the resources as a diplomatic bargaining chip, or to manipulate prices. “Many countries in the world have rare earth reserves, you cannot rely on China alone to provide all the supplies,” the official Xinhua News Agency quoted the newly appointed head of the industry group, Gan Yong, as saying.

The rare earths association includes 155 companies, including state-owned giants like Aluminum Corporation of China and China Minmetals Corporation, the ministry said in a statement on its website. Typically for China, central government policies aimed at curbing unlicensed mining and processing of rare earths had often gone unheeded by local level officials focused on maximising tax revenues and creating jobs. The new group could help regulators indirectly impose more self-discipline on the industry. The MIIT said the new industry group aims to consolidate smaller companies into large corporations, promote the industry’s restructuring and strictly enforce the mandatory production plan.