China will sharply reduce the number of firms that may export molybdenum and indium as part of an effort to restrain exports of those metals, the Ministry of Commerce said on Friday.

Thirty Chinese firms meet requirements to apply for molybdenum export licenses and 18 can apply for indium export licenses, it said on its Web site.
Two additional firms were included in a second announcement that did not specify which metal they could export.

China has been trying to limit exports of minor metals, to encourage downstream industry at home and to extend the life of its rich reserves.

In March, the ministry said China would limit the right to export to molybdenum and indium producers that met output and export criteria.

But exporters counter that the domestic market is insufficient to absorb rising production.

China`s molybdenum concentrate output could soar by 33% to reach 130,000 t, equivalent to 58,500 t of molybdenum metal content, said analyst Xu Aihua of metals consultancy Antaike in Beijing.

"There is a rule of thumb that China wants to export 40% of molybdenum output, and keep 60 percent at home, compared with 60% exported through 2005," she said.

"But they can`t really keep that much at home, there isn`t enough of a market."

China`s molybdenum metal production rose to 43,941 t in 2006, up from 29,957 t in 2005.

Some larger producers are expanding production of molybdenum products, but China added a 15 % export tax on most molybdenum products effective June 1.

The molybdenum industry is particularly fragmented. Beijing has forced the closure of many mines in Liaoning province, in the northeast, in an effort to regulate the sector.

More than 50 molybdenum producers had applied for permission to export, an official with China Nonferrous Metals Industry Association said in March.
The country holds proven reserves of 1.95 Mt of molybdenum, the world`s second-largest after the United States.