EDITOR: | January 8th, 2013

China sets the Quota for the First Batch of Rare Earths of 2013

| January 08, 2013 | No Comments

The Big Picture- Is China Worried the Rare Earth Element Game Is UpOn January 5, 2013, China’s Ministry of Land and Resources (MLR) released the quota for the first batch of rare earth mining for 2013, setting it at a total of 46,900 tons of rare earth oxides (REO). The amount is about half the entire mining quota set for 2012, MLR said in a statement posted on its website. The first batch includes mining quotas of 37,950 tons of the rocks and minerals type (light) REO and 8,950 tons of the ion-absorbed-type (medium and heavy) REO according to the statement.

The statement also pointed out that the quota for the total annual volume of rare earths mining, which needs to be based on related policies and changing market conditions (therefore, the second batch of mining quotas for 2013) would be issued at the end of the second quarter of the year. Moreover, MLR requested that the mining quotas should be allocated directly to the mining enterprises while local governments will have to announce the list of mining enterprises and related mining quotas on their websites.

China started issuing mining quotas in two batches since 2012, the distribution table below represents MLR’s rare earth mining quota for the year from 2011 to 2013, by region (in metric tons):

hong po batch

China began to exercise total control over production levels, limiting the total volume of rare earths metals to be mined every year since 2006; however, it should be noted that China’s actual mining production of rare earths has actually exceeded the mining quotas allocated in the past several years. The Chinese Society of Rare Earths (CSRE) estimated a total production of around 130,000 tons in 2010 and about 120,000 tons in 2009. Overall, I think that some local governments have been reluctant to abandon the benefits they derive from mining, masking or concealing the actual amounts of REO production, suggesting that the mining quotas policy has been a failure in previous years.

In order to enforce mining quotas policy and exercise strict control over of the total rare earth mining and production volumes of rare earth metals, China’s Ministry of Land and Resources (MLR) has slashed rare earth mining rights by almost half, going from 113 to 67 in the last year alone. China also has set up a joint supervision system to strictly regulate its rare earth industry and to crack down on illegal mining operations.

Ultimately, the MLR statement suggests that China’s total annual volume for rare earths mining quota was teetering in uncertainty at present. According to the distribution table, mining rights have been controlled by a few large state-owned enterprises after years of integration, which has led to an even greater concentration of the rare earth industry through such companies as Baogang Group (Baotou Steel Rare Earth) in Inner Mongolia, Fujian Rare Earth Group (Xiamen Tungsten Co., Ltd) in Fujian, Ganzhou Rare Earth Mineral Industry Co., Ltd. in Jiangxi, China Minmetals Corporation (CMC) Rare Earth Group in Hunan, CHALCO Rare Earth Group in Guangxi, Guangdong Rare Earth Industry Group(Rising Nonferrous Metals Share Co.) in Guangdong to mention some of the main ones.

It is foreseeable that the rare earth oversupply situation in the domestic market will finally be addressed more effectively than last year thanks to the enforcement of stronger policies.



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