SYDNEY, Oct 27 (Reuters) - BlackRock, the world's largest money manager, is unconvinced of the long-term investment potential for the non-China rare earths sector despite signs that Chinese exports are drying up.
Some prices for rare earths, used in everything from TV flatscreens and computers to mobile phones and defence equipment, have hit record highs because of Chinese curbs on exports, amid concerns that Beijing is using the commodity as a trade weapon.
"The ability to bring on production quickly in the higher-price environment means that the longer-term sustainability of those prices are questionable," Catherine Raw, a fund manager in BlackRock's natural-resources division, said on Wednesday.
China, which produces 97 percent of the world's rare earths, halted shipments to Japan after a territorial dispute with Tokyo flared up last month. Its move has sparked a flurry of activity among miners from Australia to North America to Kazakhstan.
"We are trying to invest on a three to five-year view, and longer, to identify where you can see long-term structural increases in commodities," Raw told Reuters.
"The jury on rare earths is still out."
China in July announced it would cut export quotas for rare earth minerals by 72 percent for the second half of 2010, continuing a drop in exports since 2008. It said it needed to divert more production to domestic consumption. (Reporting by James Regan; Editing by Mark Bendeich)