China increases rare earth quotas by 20% in 2021 to reach new heights
- Rare earth mine production quota for 2021 at 168,000 T vs 140,000 T in 2020
- Full-year merger and separation quota at 162,000 T vs 135,000 T in 2020
- Restricted supply of heavy rare earths will persist during Myanmar border closure – analyst
September 30 (Reuters) – China on Thursday raised its annual rare earth production quotas by 20% year-on-year to their highest levels on record, as it seeks to ease manufacturers’ tight supply.
A statement from the Ministry of Industry and Information Technology said mining production of rare earths in 2021 was set at 168,000 tonnes, up from 140,000 last year.
The quota for smelting and separating – or transforming rare earths into a form usable by manufacturers – is 162,000 tonnes, also up 20% on the year, the statement said.
China is the world’s largest producer of rare earths, a prized group of 17 minerals used in consumer electronics and military equipment.
It announces quotas twice a year, dividing mining quotas between those for light rare earths, the most common type, and heavy rare earths.
“The quota increase was quite inevitable with the current supply situation in China and the growth in demand from NdFeB manufacturers,” said David Merriman, analyst at Wood Mackenzie, referring to a type of magnet of rare earths used in consumer goods.
Neighboring Myanmar supplies about half of China’s heavy rare earth raw materials, but the closure of a key border post to contain the spread of COVID-19 has caused shipments to dry up.
“I expect the situation of shortage of raw materials (heavy rare earths) to persist until the Myanmar border reopens,” Merriman added in an email.
Quotas for the first half of 2021 had previously been set at 84,000 tonnes for extraction and 81,000 tonnes for smelting and separation. The annual quotas, published with an unusual delay, imply the same levels for the second half of the year.
Quotas are allocated to six state-owned companies, including China Minmetals Rare Earth Co (000831.SZ), Chinalco Rare Earth & Metals Co and China Northern Rare Earth Group (600111.SS).
The Minmetals unit signaled a potential consolidation of the so-called “Big Six” last week when it said its parent company was discussing restructuring with Chinalco and the government of the Ganzhou rare earth hub. Read more
The table below shows the rare earth quotas for companies for 2021 in tonnes.
Reporting by Tom Daly; Editing by Kirsten Donovan and David Evans
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