China Still Bans Rare Earths for Japan

HONG KONG — The Chinese government is continuing to block shipments of crucial strategic minerals to Japan, according to industry executives, analysts and a Japanese official.

The blocked shipments of minerals known as rare earths, despite previous signals that China was lifting the ban, could increase tensions at the meeting of the Group of 20 leading economic powers, now under way in Seoul. And it could place China at odds with Germany, which has been an outspoken critic of the rare earths policy but has recently been an ally of China’s on a separate matter that is a hot topic for the G-20 — the weak United States dollar.

The continuation of China’s unannounced embargo against Japan highlights the delicate balance that Beijing officials are trying to strike as world leaders converge on Seoul. Chinese customs and port officials have been blocking exports of raw rare earths to Japan for seven weeks, despite suggesting in late October that they were about to allow a resumption of shipments.

Rare earth shipments to the United States and Europe did resume, after a brief suspension in October.

But for Japan, “as far as we’re aware, that temporary ban, although still unofficial, remains in place,” Dudley Kingsnorth, an Australian rare earths consultant, said in a speech in Hong Kong on Wednesday morning. Mr. Kingsnorth and many executives in the rare earth industry spoke at the annual industry conference here organized by two British companies, Roskill Information Services and Metal Events Ltd.

Rare earths are essential for a wide variety of products, including wind turbines and smartphones, gasoline-electric hybrid cars, oil refining and the tiny electric motors that control the guidance fins on missiles and smart bombs.

Beijing officials have sought this autumn to assert their country’s interests more fully within Asia, across a range of issues. They successfully demanded the return of a Chinese fishing captain detained by Japan near Japanese-controlled islands, and they have insisted on sovereignty over much of the South China Sea, to the dismay of countries like Vietnam and the Philippines.

But they have also been seeking international allies to confront the United States on currency policy. The result has been a sometimes contradictory set of positions, with China aligning itself with Germany in particular on some issues and against Germany on others.

The German government and a broad range of German companies have led international calls for the Group of 20 to discuss China’s broad restrictions this year on all exports of rare earths, not just to Japan. A wide range of German manufacturers depends on rare earths, and China produces 95 percent of the world’s supply.

But at the same time, Germany and China have been among the most vocal critics of the Federal Reserve’s recent decision to buy more long-term Treasury bonds. The Fed’s so-called quantitative easing could cause a decline in the dollar in currency markets, which by making American exports cheaper could eventually erode both Germany’s and China’s large trade surpluses.

After blocking all shipments of rare earth minerals to Japan since Sept. 21, and some shipments to the United States and Europe as well beginning in mid-October, Chinese customs officials abruptly began granting approval on Oct. 28 for most exports to resume.

But a day later, Chinese port officials quietly began blocking the loading of ships with containers of rare earths destined for Japan. That reversal came after high-level China-Japan talks in Hanoi on Oct. 29 failed to produce a thaw in bilateral relations, industry executives and analysts said.

Several industry executives said that they had initially interpreted the port difficulties as a minor logistical problem and a coincidence. This week, though, they say it appears to be a continuation of a ban that began seven weeks ago.

Normal shipments have resumed to the United States and Europe, three rare earth industry executives said in interviews on the sidelines of the industry conference here, which began on Wednesday and ends on Thursday. And Chinese customs officials have been more willing to process the paperwork for shipments to Japan in the past week, executives said, even as the actual loading of vessels is now suspended.

Japan had no official confirmation that rare earth shipments from China resumed even briefly at the end of October, a senior Trade Ministry official said in Tokyo. The official, who demanded anonymity, said that rare earth shipments to Japan continued to be held up at Chinese ports and that the Japanese government had not seen any signs that trade would be normalized in recent weeks.

Japan, the biggest importer of rare earths, is still asking China to clarify and correct the situation, the official said. He added that it was Japan’s understanding that the United States shared its concern over China’s action, and would continue to seek opportunities to discuss and cooperate on the issue.

He said that ministry officials expected the issue to be raised by Prime Minister Naoto Kan of Japan at two conferences this week by heads of state: the G-20 session in Seoul on Thursday and Friday, and a weekend meeting in Yokohama, Japan, under the auspices of the Asia-Pacific Economic Cooperation.

Mark A. Smith, the chief executive of Molycorp, which owns and is trying to reopen the main American rare earths mine at Mountain Pass, Calif., said at the conference in Hong Kong that he had been working with White House officials on rare earth issues in connection with President Obama’s trip to Asia. It is “highly likely” that President Obama will raise the issue with President Hu Jintao of China when the two men meet in Seoul, Mr. Smith said.

China’s commerce ministry has denied repeatedly that a regulatory ban on exports has been imposed.

Most rare earths are not actually rare. But China dominates world production because the rare earths in its major ore deposits are unusually easy to extract for geological reasons. China has also been more willing than other countries until recent months to accept the environmental damage that often accompanies rare earth mining.

Prices have surged up to ninefold this year for some rare earths, as China sharply reduced its export quotas in July and then began blocking companies in late September from using their export quotas for shipments to Japan. Mr. Kingsnorth and Roskill Information Services predicted in their annual market forecast, released at the industry meeting Wednesday, that rare earth demand would grow a little less quickly in the next five years than previously predicted.

Users of rechargeable batteries, including automakers with hybrid cars like the Toyota Prius, are responding to high prices and shortages by accelerating a shift to lithium ion batteries instead of nickel-metal-hydride batteries, which require lanthanum, a rare earth. But demand for rare earths is still accelerating for clean energy industries like wind turbines, Mr. Kingsnorth said.

(source:nytimes.com)

Dalai Lama still revered by Tibetans in China

She’s a mother in her early 40s, making a pilgrimage to Labrang Monastery, heading west through snowcapped mountains along Highway 312 — on her hands and knees.

It has been four days in chilly temperatures. Dolma estimates she has four more days to go, prostrating herself on the pavement every third step of the way as cars and transport trucks blow past.

And yet she’s smiling — and offering me food.

A chance encounter with Dolma is testament to Tibetans’ enduring devotion to their Buddhist faith, underpinned by a loyalty to the Dalai Lama, who has not seen this land for more than five decades.

“It would be better if he came back,” says Dolma, pulling a plastic bag from her knapsack on the banks of the rushing Daxia River to share half of a bit of bread.

He is still “our spiritual guide,” she says.

Whether the Dalai Lama will ever return to Tibet — and to this remote piece of Chinese countryside that is home to the greatest Tibetan monastery outside the official boundaries of Tibet — is questionable.

The decision ultimately rests in the hands of the Chinese government, stung by riots that erupted in the Tibetan capital of Lhasa in March 2008 and then spread eastward through towns here on the margins of the Tibetan plateau.

Labrang monastery was a centre of discontent at the time. So were monasteries near Langmusi, a four-hour drive south.

But whether the Dalai Lama returns or not, isn’t likely to affect the loyalty of the people here.

“Every family has a photo of him in their home,” says a shopkeeper on the mainstreet of Xiahe, the town that is home to the Labrang monastery.

“That picture?” the merchant says, pointing to a photo of the Dalai Lama behind the counter. “We take it down when the police come in. Then we put it back up when they leave.”

One Tibetan home in Xiahe visited by the Star recently was festooned with images of the Dalai Lama.

Local authorities loyal to the government in Beijing might not like it but they can’t stop it, no matter how hard they try.

Police ransacked local monasteries in 2008 hunting for images of the Dalai Lama. Monks who didn’t give them up faced arrest and even beatings.

China’s central government hoped their crackdown in the wake of the rioting — which they accused the Dalai Lama of instigating from his base in India, a charge he denies — would undermine local loyalty to Tibet’s most famous protector.

It didn’t happen. In fact, a group of respected Chinese legal scholars who issued a report last year suggested that, if anything, those loyalties have likely deepened.

The Beijing-based Open Constitution Initiative, said the 2008 riots in Tibet and Tibetan areas have made the Tibetan people — especially the youth — sense their “differences” even more.

Just this week at least 1,000 students, and perhaps as many as 7,000, staged a daring protest in the remote town of Tongren, 75 kilometres northwest of here, triggered by rumours that local Communist Party officials were planning to end classes taught in Tibetan.

Protests in China, unless you are participating in government-tolerated protests against Japan these days, are an open invitation to arrest, sometimes for years.

None have been made in Tongren — so far. But in a country where dissenting voices are simply not tolerated, many fear they will come.

The Open Constitution Initiative, for example, which issued the report last year critical of the government’s handling of Tibet, has been shut down.

Yet such heavy handedness appears not to have worked.

Inside a dim and spartan apartment high on a hillside above Langmusi, 200 kilometres south of Labrang, a lean and wiry monk from the Lhamo Kerti Monastery sets some barberry twigs alight. Like a human bellows, he blows the flames higher until the light dances off his tawny face.

His name cannot be used. He’s on a government register and his safety could be at risk. But despite government harassment, his loyalty to the Dalai Lama is unchanged.

He was in this very room, he says, on an evening following the 2008 riots when 12 armed policemen showed up.

“They wanted every picture of the Dalai Lama I had,” he says. “I refused, and one of the police officers pointed a gun at my head then.”

He uses his right hand and for emphasis points his index finger at his forehead like a cocked gun. “They said I’d better co-operate.”

He went to his cupboard and retrieved the pictures. “I had no choice,” he says. “I performed a small ritual and handed them over.

“There were hundreds of police, maybe a thousand in all, going room to room that night,” he says.

Thereafter, weeks of “political education” classes followed in which he and his fellow monks were forced to denounce the Dalai Lama and pledge loyalty to the Communist Party or face arrest.

Most complied, he said, but only because superiors told them the denunciations would mean nothing.

“We continue to do as the Dalai Lama wants us to do,” he says.

They study, they pray, they lead lives of humility and compassion.

Monks at the Lhamo Kerti monastery, as all the locals know, supported the pro-Tibet protests then. Monks at their associate monastery, the Lhamo Serti, just a kilometre away across this valley in Gansu province, did not.

The differences between the monasteries today are as stark as day and night. Serti has been described by the local Communist Party Secretary Wang Wanbin as “a good model of patriotism,” and it glistens with elaborate gilt and bronze roofs that sparkle in the sun.

The Serti contains 400 exquisite figures of Buddha, 8,000 pictures and 28,000 sutras, tucked away in ornate temples. Artwork has been brought here at great expense from Nepal, Taiwan, Mongolia and Tibet.

A glossy brochure touting it as a tourist destination boasts it has received support “from all levels of government.”

Not so with Lhamo Kerti: it is a sad and shabby place in need of paint, plaster and repair. There are no gilt roofs there — only rotting wood and aluminum.

“The government doesn’t give us a cent,” says a Tibetan lay workman repairing one of the small temples. “Everything you see here is being done by the monastery on its own.”

A visitor could be forgiven for thinking that there is a price to be paid for loyalty to the Dalai Lama. But the host monk, who now offers bread, yak butter and tea, is clearly prepared to pay it.

“Why is there such a difference between the two?” he asks rhetorically. After all, both monasteries belong to the Gelugpa (“Yellow Hat”) school of Tibetan Buddhism, to which the Dalai Lama adheres. “Because we have a good relationship with the Dalai Lama. We listen to the Dalai Lama. And they do not.”

A local Chinese businessman agrees with this tale of two monasteries.

“It’s politics,” says Liu Bin. “The Lhamo Kerti monks got involved in the 3/14 incident,” he says, referring in the Chinese fashion to the March 14, 2008 riots that took place in Lhasa and other Tibetan districts.

Liu’s not enamoured with how much money has been poured into the Lhamo Serti monastery— or the local Tibetan community, for that matter.

“They put 70 million renminbi (more than $10 million) into that monastery,” he says. “The government gave the Tibetans 500 million renminbi one year just to get through the winter. And they build houses for them worth 50,000 renminbi equipped with appliances. Then they gave each family two tonnes of coal for the winter.”

The changes in Langmusi have been “huge,” he says, looking out on the rugged, potholed main street bustling with small-town commerce, most of it led by ambitious Chinese and Hui (Muslim) business people.

Langmusi is still, essentially, a frontier town.

“When I came here as a tourist 10 years ago the Tibetans were still riding horses. Now they all have motorcycles,” he says, gesturing through the window and dragging on a cigarette.

On the face of it, that’s true. Many young Tibetans make their way around Langmusi’s rutted streets on smart motorbikes.

But as Chinese academics involved in the Open Constitution report point out, until at least last year, the local region, known as the Gannan Autonomous Prefecture, was a nationally designated poverty relief zone, with farmers and nomadic herders living below subsistence levels.

Education levels, despite significant funding by the central government, remain low. Statistics for 2007 show the average Tibetan has less than four years of schooling.

And the government’s long touted nine-year compulsory education plan was only put in place in Langmusi’s Luqu County this year.

Despite the Chinese government’s increased spending in Tibetan areas, the report emphasized, understanding and respect for the Tibetan culture must be fundamental if China is ever to solve the Tibetan question.

The report said the there may have been some outside influences in stirring the riots, but the government’s policies have also fallen short.

It quoted one Tibetan interviewee who stressed that what matters most to Tibetans goes far beyond consumerism and better housing.

“A Tibetan’s prosperity is more about freedoms, such as freedom of religious belief, a respect for people, a respect for life,” a Tibetan named Norbu said.

For most Tibetans here it also means keeping a special place for the Dalai Lama. Sometimes it’s a picture on a wall, sometimes it’s a prayer, but mostly it’s a deeply felt sentiment that hasn’t gone away.

In Labrang, a nervous young monk in his 20s — careful to keep out of earshot of almost anyone — says bluntly, but with feeling:

“No matter where the Dalai Lama is, whether he is here in China or in any other country, there will always be a special place for him in my heart.”

(source:thestar.com)