China said Tuesday it is cutting rare-earths export quotas by 11 percent in the first round of permits for 2011, threatening to worsen a global shortage of the minerals needed for smart phones, hybrid cars and guided missiles.
The government allotted 14,446 metric tons of rare-earth exports split among 31 companies, the Ministry of Commerce said in a statement. That compares with the first round this year of 16,304 tons and the second round of 7,976 tons, according to previous ministry statements. The government usually issues two rounds of export quotas every year.
China, which accounts for more than 90 percent of world supplies, slashed export quotas by 72 percent in the second half of this year, sparking a surge in prices. Japan, the biggest user, has sought alternate supplies with companies including Hitachi Metals and Toyota seeking cooperative ventures at home and abroad to secure the minerals.
Shares of rare earth mining company Molycorp Inc., which is restarting mining at its property in Mountain Pass, Calif., about 65 miles south of Las Vegas, rose as much as 11.6 percent on Tuesday after China announced the cuts.
Reuters noted that the surge, which extended the nearly 10 percent jump that Molycorp shares posted Monday, proved temporary. By midafternoon, shares were down about 1.2 percent. The shares fell $3.26, or 6.59 percent, to close at $46.18 on the New York Stock Exchange.
Molycorp's market value has tripled in the last five months as China moved to more tightly control rare-earth exports, Reuters said.
Hitachi Metals and Molycorp agreed last week to form joint ventures to manufacture products using the rare-earth ores from Molycorp's mines.
The announcement said that two companies expect to sign a deal in April to make neodymium-iron-boron alloys, the building block for a wide range of products. Another joint venture would follow later in the year to manufacture industrial magnets.