China extends embargo of crucial minerals to U.S., Europe

China extends embargo of crucial minerals to U.S., Europe

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Associated Press | Posted: Wednesday, October 20, 2010 12:00 am

HONG KONG • China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted shipments of some of those same materials to the United States and Europe, three industry officials said Tuesday.

The Chinese action, involving rare earth minerals that are crucial to manufacturing many advanced products, seems certain to further ratchet up already rising trade and currency tensions with the West. Until recently, China typically sought quick and quiet accommodations on trade issues. But the interruption in rare earth supplies is the latest sign from Beijing that Chinese officials are willing to use their growing economic muscle.

"The embargo is expanding" beyond Japan, said one of the three rare earth industry officials, all of whom insisted on anonymity. They said Chinese customs officials imposed the broader shipment restrictions Monday morning, hours after a top Chinese official summoned international news media Sunday night to denounce U.S. trade actions.

China mines 95 percent of the world's rare earth elements, which have broad commercial and military applications. Any curtailment of Chinese supplies of rare earths is likely to be greeted with alarm in Western capitals, particularly because Western companies are believed to keep much smaller stockpiles of rare earths than Japanese companies do.

China's commerce ministry has repeatedly denied that it has imposed an embargo on shipments to Japan, even though Japanese ministers and industry executives say the shipments to their country have been blocked by Chinese customs officials since Sept. 21.

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note: update. China has changed policy on exports of raw materials. Will update later with details.