China may lack rare earths needed for hybrid cars

China said supplies of dysprosium and terbium, minerals needed to make hybrid cars, may be inadequate for its own needs, Bloomberg reported last Thursday, citing an industry official.

As a country that accounts for more than 90 percent of global rare-earth output, China "may not have enough supply" of the two minerals as demand increases, Wang Caifeng, deputy director-general of the raw materials department at the Ministry of Industry and Information Technology, said September 3.

Surging production of hybrid cars at home and abroad such as BYD's plug-in hybrid F3DM and Toyota Motor's Prius, drives demand for rare earths. China has cut export quotas to shore up prices and ensure domestic supplies, though there will be no ban on exports of the elements, Wang said.

China has about half of the world's reserves of rare earths, a range of more than 15 elements such as scandium and lanthanum. The government started to curb output and exports in 2006 as prices dropped, and the country may stockpile elements in a strategic reserve.

The Chinese government urges its automakers to produce more eco-friendly new-energy vehicles, especially the hybrid cars. BYD Auto and Chery Auto have launched their hybrid models since late 2008, and other car companies in China are following suit.