For a number of years China has been the world’s leading supplier of rare metals. In fact, China accounts for over 95% of the world’s rare metals. In a very bold move on Tuesday, the Chinese government announced that beginning in 2011 the country would begin to limit the exports of these rare earth metals to countries all over the world.
What does this mean for the trading world?
The first noticeable effect this limited number will have is an effect on the prices of various products all over the world. Rare metals are used in products such as computers, automobiles, smart phones and other technologically advanced items. With the limited number of rare metals that could be distributed it will drive prices of these products even higher due to the limited amount of metals that will be able to be used for such products.
The other effect that this limited number will have is on those that invested in rare metals. With 95% of the world’s rare metals coming from China, this limited number of exported metals could deeply cut into any person’s finances who have invested in rare metals.
While there is no reasonable explanation for the limited amount of rare metals that will be leaving China, the move is certainly not unexpected. Over the past few years China has slowly been decreasing the amount of exports with little or no explanation. China has also drastically increased taxes on rare mental exports. The taxes on these exports rose from 15% to 25% just this past year. China has also started taxing other exports of metals such as oxides and alloys that are not considered rare metals but still come solely from China.
China has tried to reassure experts and those in the rare mental export business that this limit could be temporary. However, only time will be able to tell if this limitation on rare metals is here to stay.