The Chinese Ministry of Commerce last month announced new quotas for rare-earth exports, distressing a number of countries that claim China is choking off the supply to foreign manufacturers.

In May, the Chinese Ministry of Commerce increased the country’s rare-earth export quota, allowing 11 companies to export an additional 10,680 tons, bringing the total authorized quota this year to 21,226 tons.

China, exporter of more than 90 percent of the world’s rare earths, began curbing rare-earth output and exports in 2009, when exports were capped at 50,145 tons; the 2011 total for rare-earth exports was set at 30,184 tons. Ministry officials in December stated that export quotas this year would not change significantly, as reported by Bloomberg News, which calculates the likely 2012 quota to total 31,130 tons.

Rare earths are a group of 17 chemically similar elements, used in a broad range of electronics and defense products, information technology and transportation industries. Despite the name, rare earths are abundant around the globe, but usually in small or hard-to-extract quantities. While China currently commands the majority of the rare-earth market, mines in the United States and Malaysia are going into operation to provide more diverse sourcing options.

Beijing-based consulting firm Baichuan Information noted that by March, China had exported 2,773 tons of rare-earth metals, falling more than 70 percent compared to the past year, as the Wall Street Journal reports (subscription required).

“The global market has adopted a cautious, wait-and-see attitude in rare-earth procurement, resulting in weakness upstream and downstream,” Du Shuaibing of Baichuan noted.

China’s export controls caused prices to spike in summer 2011 before crashing in the fall. Australian mining company Lynas Corp. said the May 14 price of lanthanum oxide was $26 per kilogram, significantly lower than the $104.10 average for 2011. Foreign companies sourcing rare earths from China must pay twice the rate paid by companies operating in China, a practice, as Wired explains, designed to incentivize companies to set up operations in the country.

In response to China’s quota practices and roller-coaster pricing and supply policies, an international consortium including the U. S., the European Union and Japan filed an official complaint against China with the World Trade Organization (WTO) in March.

“We invent solar panels, they end up in China. We’re inventing electric cars, they end up in China. Why? Because they’ve got rare earths,” Michael Silver, chief executive of American Elements, a company that produces rare earth products, told Reuters.

“These measures hurt our producers and consumers in the EU and across the world, including manufacturers of pioneering hi-tech and ‘green’ business applications,” Karel De Gucht, European Union trade commissioner, said.

China’s Minister of Industry and Information Technology Miao Wei said, “We regret their decision to complain to the WTO,” and restated the official Chinese position that quotas do not qualify as trade protectionism and these acts didn’t target any specific country. BBC News notes that only about half of 2011’s quota was used.

China has also instituted increasingly stringent environmental requirements that companies must meet before being allowed to export. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., a unit of Baotou Iron & Steel Group, Aluminum Corp., was denied a quota, while Guangdong Zhujiang Rare Earths Co. and Huhhot Rongxin New Metal Smelting Co. await approval. Bloomberg notes that companies that do not fulfill Chinese environment-protection standards by July 31, 2012, will not be allowed to export for the rest of the year.

It could take up to two years to formally settle the WTO complaint against China. In the meantime, the chief engineer of the Chinese Ministry of Industry and Information Technology, Zhu Hongran, held a press conference in early May to stress China’s dedication to environmentally friendly rare-earths development, and to invite foreign investment and cooperation in the sector.

“The U.S.’s, Japan’s and Europe’s [capabilities] in environmental management, recycling, technology research and development of high-end applications are welcome in China,” Hongren said in a separate Wall Street Journal report (subscription required).