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China's restrictions on rare earth element (REE) exports - which led the US, Japan and the EU to file a joint case against the Asian country at the World Trade Organization (WTO) this week - have commercial, strategic and military motivations, Brazil-based international consultant Rubens Barbosa told BNamericas.
Last December, China announced an REE export quota of 10,546t for 2012. The Asian country claims the quotas are to preserve the environment as radioactive elements are generated during exploration.
China has the largest REE reserves in the world at an estimated 55Mt, according to the US Geological Survey (USGS). The country also produces around 97% of the world's supply.
By imposing export restrictions, China has caused prices to increase and has made REEs, which are used for hi-tech and military products, less available, according to Barbosa.
"REE prices have already been affected in the last two years. There is no immediate alternative to replace Chinese exports and [whatever] the WTO decides may take time to implement," the consultant said.
Since China began to set export quotas on REEs in 2009 prices have risen fivefold.
For the foreseeable future, the availability of REEs will remain problematic, according to Barbosa.
With REE production so dominated by China and as demand rises, countries are beginning to wake up to the need to either challenge China's policies or start production themselves.
In Latin America, the country with the most significant reserves is Brazil where the senate is scheduled to hold a public hearing regarding the creation of a national policy for the exploration and research of REEs on April 25.
"Rare earths are a matter of national sovereignty due to the multiplicity of their uses, including the defense sector and the oil industry. Therefore, we need a strategic policy to promote production, business development and the use of reserves," Santa Catarina state senator Luiz Henrique said in February this year.
However, Brazil only has 48,000t of the world's 110Mt reserves, according to USGS estimates, although "Undiscovered resources are thought to be very large relative to expected demand," the USGS said in its 2012 mineral commodity report.
REEs are actually not that rare and are found in many countries. However, they are difficult to extract in volumes that make them economically viable.
Brazilian mining giant Vale (NYSE: VALE) is looking at entering the rare earth sector.
"We are pretty optimistic regarding [this sector], and we are working very hard in this area in research and development," Vale's director of marketing, sales and strategy José Carlos Martins said.
Since reserves are small in volume, Vale still needs to evaluate the economic feasibility of extraction, according to Martins.
"It will take time [for Brazil to compete in the REE market] due to the lack of investment and the state's monopoly over radioactive materials," Barbosa said.
REE reserves in Brazil are found in Goiás, Rio de Janeiro and Amazonas states. There are indications of reserves in other Amazon regions and new deposits will also be surveyed in the Atlantic Ocean, according to the senate's science, technology, innovation, communication and information technology committee (CCT).
REEs are a group of 17 elements that are primarily used to make components for items such as wind turbines, electric cars and computer screens.
The Commonwealth of Independent States (CIS) has the second largest REE reserves in the world with 19Mt and the US is third with 13Mt, according to the USGS.
Additional reporting and editing by Greta Bourke