Rare-earth mineral shortage drives companies to China

New York Times : China’s near total monopoly on the rare-earth market, is forcing foreign manufacturers of high-tech materials to move their production to China. Those that don’t must contend with uncertain supplies and higher prices. The restrictions are an attempt by the Chinese government to increase the number of high-tech companies in the country and to encourage technology transfer to local Chinese-owned corporations. “We saw the writing on the wall--we simply bought the equipment and ramped up in China to begin with,” said Mike Pugh, director of worldwide operations for Intermatrix, who told the New York Times the company would have preferred to build its new factory near its California headquarters.The move seems to be directed by Premier Wen Jiabao, a former geologist who studied rare earth minerals at graduate school. Denying international access to materials to favor local production may make China in breach of regulations established by the World Trade Organization, of which it is a member. The European Union is considering taking China to court once a related case is finally resolved.