China will appeal a WTO ruling against its policy on exports of raw materials, a verdict that could potentially force the country to relax its control on rare earths, the Ministry of Commerce said Wednesday.

A World Trade Organization panel in July ruled that China broke trade rules by limiting exports on several industrial raw materials, including bauxite and coke, with duties and quotas.

Ministry spokesman Shen Danyang yesterday said China will appeal, as he reiterated the nation's practices and policies don't violate WTO rules. China has said the policies will protect the environment and conserve natural resources.

The WTO ruling is seen a victory for trade partners such as the United States and the European Union, which said China's export restrictions on raw materials are giving an unfair edge to domestic manufacturers.

The ruling could also prompt the US and the EU to lodge more complains to the WTO about China's export policy on rare earths, a group of valuable elements vital in the production of hybrid cars, wind turbines and missiles.

China, which supplies more than 90 percent of the world's rare earths, controls output and exports of the minerals, a move that forced manufacturers in the US and Japan to seek supplies elsewhere. China has maintained its 2011 export quota for rare earths at last year's level.

China's dominant position in rare earths is partially due to Western countries shutting their own mines amid strict environmental standards and high costs, the Shanghai Metals Market said in a report yesterday. Some companies in the West have unveiled plans to restart their rare earths projects after prices surged, a move that may end China's dominance of rare earths supply within two years, the SMM said.

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