By Peter Cai and Philip Wen
CHINESE authorities have barred the world's largest rare earths producer from exporting due to ''environmental concerns'', in a move likely to significantly affect global supply.
Baotou Steel, which accounts for nearly half of the world's rare earth production, has been excluded from the Chinese Ministry of Commerce's list of 11 approved exporters for next year, released last week.
Lynas' Mount Weld mine in WA could benefit from a ban on China's major rare earth producer.
China accounts for more than 95 per cent of world production and tightly controls the export of the strategic elements through a quota system.
Baotou also failed to make a recent list of companies that had passed environmental assessment standards maintained by the Ministry of Environmental Protection in China. It must now rectify its faults to be considered for a second round of approvals, according to a ministry official.
''Baotou is the world's largest producer and has the highest quota for export and production. It is unimaginable for the industry if it loses its quota because of environmental concerns,'' a Chinese industry insider said on Friday, according to Shanghai Securities News.
The lost exports from Baotou could lead to acute supply constraints and potentially prompt a surge in rare earth prices, mirroring a similar spike when China banned exports to Japan last year over a diplomatic row.
This would benefit rare earth miners racing to be among the first non-Chinese producers, including Australian miners Lynas, Arafura Resources and Alkane Resources, and other international majors including California-based Molycorp.
''If the [rare earths] price reacts, it will be pretty positive for those companies,'' one analyst said.
Rare earths are coveted for the crucial role they play in the manufacture of many cutting-edge technologies, including mobile phones, iPads, wide-screen televisions and hybrid car batteries.
Baotou had halted its production for more than a month in October, in response to rapidly falling rare earth prices.
At the time, it said it was trying to provide price support in the market by regulating the amount of supply, but it was widely speculated that environmental concerns were at the root of the production halt.