Germany to Raise Alarm Over China Rare Earths Restrictions for G-20

Stung by Chinese muscle-flexing over minerals crucial for high-technology industries, the German government said Thursday that it would raise the alarm at the Group of 20 talks, even as it looks to step up efforts to develop new supplies in Eastern Europe and Central Asia.

A blog about energy and the environment.

Go to Blog German companies say they are being pressed by Chinese officials to increase their investments in China if they want to be assured of access to rare earth minerals and two other obscure elements, tungsten and antimony. China dominates the mining of these metals.

Of all the countries dependent on these exports, Germany is making the loudest protests about China s behavior and appears dissatisfied with the European Union s more muted approach. Without mentioning China by name, the German economy minister, Rainer Br derle, said attempts to monopolize such minerals presented a global challenge that had to be addressed at the G-8 and G-20 summit meetings in South Korea next month.

These materials are decisive, especially for developing Germany s new high technology, Mr. Br derle, who visited Japan and China last week, said in a statement. He said Germany and Japan wanted to work together to stimulate production in other countries that have rare earth elements.

Such elements are used to make a wide variety of electronic goods, including mobile phones and flat-screen televisions. They also can be found in specialized industrial products like drills and components for electric automobiles.

Three industry officials told The New York Times this week that China, which has been blocking all shipments of crucial minerals to Japan for the past month, has now quietly halted some shipments of those materials to the United States and Europe.

As of Thursday morning, Chinese customs officials, for a fourth day, were blocking final approval of the paperwork necessary for rare earth shipments to be loaded on ships and exported, industry officials said. Some shipments of rare earth metals were still leaving Chinese ports, but they tended to be cargos for which the customs paperwork had been approved before Chinese officials cracked down Monday.

The cuts have caused prices to rise and stoked fears in the industry that there could be a serious shortage of these metals. China denies that any embargo exists.

German industry and government leaders plan to hold a conference Tuesday in Berlin with Pascal Lamy, secretary general of the World Trade Organization, and other officials to address the issue.

We are worried, especially about what impact any reductions would have on prices, especially for the industry sector that makes drills, said Manfred Grimm, an expert on precision instruments at the German Engineering Federation. Drill bits use tungsten, a particularly hard rare earth metal.

It is crucial that we try to diversify our sources, he said.

Marlies Sch fer, a spokeswoman for the engineering federation, said companies have been told by Chinese officials that if they wanted to be assured of access to such raw materials they should invest in China.

That is what we were told, she said. The federation has more than 3,000 member companies.

The German car industry is also monitoring the situation closely, said Eric Heymann, transport specialist at DB Research in Frankfurt, who pointed out that electric cars are especially reliant on rare earth elements.

Maybe China needs the minerals since China intends to become the technological leader in electric cars, Mr. Heymann said. China also wants to become less dependent on oil and reduce pollution.

The United States opened an investigation last Friday into whether China was violating World Trade Organization rules with its clean energy policies. That investigation includes China s export quotas and export duties on rare earth metals.

While the W.T.O. bans export quotas and export duties, there is an exemption for export restrictions if they are carried out to protect the environment and to preserve supplies of natural resources that might otherwise be exhausted. Chinese officials have said in recent weeks that these are, indeed, the reasons behind their rare earth policies.

But the German allegation that China is seeking investment, if proved, could seriously undermine the Chinese position.

Ms. Sch fer from the German Engineering Federation said that the European Union had been sleeping while this issue developed. A spokesman at the European Commission, John Clancy, said this week in Brussels that the situation was being monitored.

Pressure on the German government to act has also come from the Committee on Eastern European Economic Relations, an influential lobbying group for German industries involved in the region and as far afield as Central Asia.