China is temporarily halting the production of a rare earth metals in three mining districts in Jiangxi Province city. The Xinhua News Agency said that Gangzhou which is the largest producer of the rare earth metal called dysprosium has been ordered to comply strictly with the annual production quota.
The move has been made by the government as they believe that the annual quota for the region has already been met and they need to prevent over development. The production of dysprosium, which is used in engines of hybrid vehicles and air conditioners, will be suspended till the end of this year.
The surging prices of dysprosium have caused Japanese electrical companies to raise the price of air conditioners as well. The Japanese have been calling for a more lenient approach to rare earth production in China but to little avail.
China has been announcing various new policies to control environmental damage and protect resources. It has suspended the issuing of new licenses for rare earth prospecting and mining as well as imposing production limits and export quotas.
Since China controls nearly 95% of the rare earths market it has been difficult for manufacturing companies to find alternative sources of the minerals. The resulting shortage of rare earth minerals has been instrumental in driving the prices sky high for many electronic gadget manufacturers.
The world is now scrambling to find new sources of rare earths and many mining companies are prospecting all over the world for new deposits. In India the Indian Rare Earths Ltd company has just received environmental clearance to produce the hi-tech minerals at the plant in Orissa. The plant will resume operations after closing down in 2004 in the face of cheaper competition from China.
The United States and Australia also have big deposits of rare earths which they have begun to develop. While the dependence on China will continue till these mines come into production a couple of years down the road, the future may see electronic companies having enough alternative resources to the Chinese production.