EU takes action over China export duties

By Shruti Salwan, Davide Ghilotti
Published: Monday, 22 August 2016

EU launches third legal case against China, who has argued that “restrictions protect environment”.

The Trade Commission of the European Union (EU) has filed a third case with the World Trade Organisation (WTO) against China’s export duties on a range of metals and minerals, the supply of which is crucial to the regions downstream industries.

According to the EU body, the restrictions on 11 critical raw materials including graphite, cobalt, copper, lead, chromium, magnesia, talc, tantalum, tin, antimony and indium, are against WTO rulings.

Cecilia Malmström, Trade Commissioner at the EU, said in a statement that the EU producers and consumers have been hit by unfair trading practices. "The past two WTO rulings on Chinese export restrictions have been crystal clear - these measures are against international trade rules. As we do not see China advancing to remove them all, we must take legal action," she said.  

This is the third legal case the EU has filed against China on the similar grounds after winning two legal suits in 2012 and 2014.

It follows similar a action launched by the  US trade authorities last week challenging China on the enforcement of export duties on nine essential raw materials.

However, China’s Ministry of Commerce has rejected the challenges made by the US and the EU, arguing that it has always respected WTO rules and that the measures are necessary to support an environmentally friendly and sustainable production of raw materials.

The Chinese Ministry of Commerce said it "regrets" the actions taken by the US and EU "and will appropriately handle it according to WTO dispute resolution procedures". 

China currently imposes a set of export restrictions, including export duties and quotas that limit access to these essential raw materials which are crucial to a variety of industries such as batteries, paints, chemicals, plastics and electrical circuits.

At present, China dominates the market as a low-cost producer and supplier of different raw materials, which has raised concerns among economies across the world fearing higher prices for essential metals and minerals required for their downstream applications.

Nabaltec’s US ATH plant to shut for '9-12 months’

German functional fillers producer Nabaltec AG is to halt production at its US subsidiary Nashtec LLC for up to one year following the discontinuation of supply from bankrupt producer Sherwin Alumina, which announced closure in August.

Sherwin Alumina’s Texas plant supplies raw material to Nashtec, which the latter employs in the production of precipitated aluminium hydroxide (ATH) for application as flame-retardant filler, serving the North American market.

Nabaltec told IM that the Nashtec plant, based in Corpus Christi, Texas, will stop production "at some point in September", and that the hiatus will continue pending an agreement on how the plant will operate in the future.

"Production would stop for 9-12 months," Gerhard Witzany, member of the board at Nabaltec AG, told IM in August.

"As long as Shwerwin produces, we keep producing. Their production should stop towards the end of August/beginning of September."

The temporary closure will continue until Nashtec’s owners – a joint venture between majority owner Nabaltec and Allied Alumina, part of Glencore – find a solution to run the site as a standalone ATH plant, IM was told.

The Corpus Christi facility has a 25,000 tpa fine precipitated hydrate capacity.

During the operational stoppage, Nashtec’s customers will be supplied directly by Nabaltec from the Schwandorf plant in Germany. Capacity at the plant has been increased to accommodate higher volumes to serve the additional customer base.

"Nashtec produces only one quality of ATH, which is APYRAL 40CD. In this sense, it is overall manageable to [supply that range] from the German plant," said Witzany.

He added that while the company would not incur any particular costs from the altered route, it will have to manage substantial changes in lead and delivery times. While freight from Corpus Christi to Boston is about five days, from Europe it is four to five weeks.

"The lead time will increase: customers will have to place orders earlier, and we’ll have to prepare earlier so as to deliver [within the customers’ timeframe]," he said.

Despite the closure of the US facility, the company remains focused on increasing its overall production capacity to supply the flame retardants sector, as it told IM earlier this year.

"As soon as we find a solution for Nashtec to return to production, we will be able to up capacity," Witzany said.