China will adopt Stable Rare Earths Export Quotas in 2013

RareMetalBlog-China-News-208BIn 2012, the world grew weary of China’s rare earth export quotas, leading to a trade dispute involving the World Trade Organization (WTO) and a lawsuit against China over export restrictions and near monopolization of rare earth elements from the United States, the EU and Japan. However, the export quota was still significantly higher than the actual amount of rare earth exports due to flagging global demand since 2011. The rare earth products (REO) quota in 2012 was 30,996 metric tons and China’s actual volume of exports only was 13,014 metric tons of in the first 11 months for 2012. This represents less than half of the 2012 full-year quota, according to the China Customs Statistics Information Center.

On December 28, 2012, China’s Ministry of Commerce announced that the first batch of rare earth export quotas for 2013 shall amount to 15,499 metric tons, noting that: ”there is about half the quota set for all of 2012”. The quota accounts for 87% light rare earths, or 13,561 metric tons, and medium-heavy rare earths at 13 percent, or 1,938 metric tons. There will be a total of 28 enterprises sharing the quota, including Inner Mongolia’s Baotou Steel Rare-Earth Hi-Tech Co, the country’s largest light rare earth producer. Only one enterprise, Jiangxi South Rare Earth Hi-Tech Co., Ltd (a subsidiary enterprise engaged in the separation of rare earth under China Minmetals Corporation (CMC) Rare Earth Group, the country’s largest heavy rare earth producer) missed the qualification for the first batch of rare earth exports.

China usually issues two yearly batches of export quotas for rare earths. Below is the Distribution Table of the First &Second Batch of China’s Rare Earth Export Quotas in 2011-2013:

hong po REE export quotas 2013

China’s Ministry of Commerce said that the rare earth export quota system aims to protect resources and the environment to further strengthen the management of rare earth exports while standardizing export orders in an effort to promote sustainable development.

“The government should gradually loosen its rare earth export quota system and consider lifting rare earth export restrictions, which may help competitive rare earth enterprises in reaching out to global markets and reduce smuggling.” As prices of China’s rare earth products dropped sharply over the past year, there will be additional rare earth supply patterns being formed through the New Year, as hinted by insiders in some of China’s rare earth enterprises.

Will China continue to adopt a stable rare earths export quota policy in 2013? On December 19, 2012, Liu Yinan, vice-chairman of the Chinese Chamber of Commerce for Metals, Minerals and Chemicals Importers and Exporters, said that the export quota for rare earths will not be altered. Moreover, export volumes in 2013 will remain relatively stable despite decade-low export levels. This suggests that the price of rare earths also should remain stable. I think that the Chinese government is attempting to allay fears of cornering rare earth export quotas ahead of time. China will, therefore, maintain a stable rare earth export quotas policy in 2013; and this could prove to be the right choice.

In order to stabilize the rare earth market and help guide stable prices for rare earth products, on December 21, the Ganzhou Rare Earth Industry announced that the Ganzhou Rare Earth Mineral Industry Co., Ltd, the largest producers of heavy rare earth minerals in the world has adjusted the ion-absorbed-type rare earth (heavy rare earth) ore price down to 170,000 Yuan per ton from 250,000 Yuan per ton. On December 25, Baotou Steel Rare Earth announced that it would continue to cut production for a third month to help stabilize tumbling prices. In a statement, it noted that “the rare earths market started to recover in the past two months without improving fundamentally.”

On the same day, it was confirmed that the State Regulator for the Center of Supplies Reserve (SRCSR) had started to adopt a stockpiling policy, suggesting they would need to store a total of 19,750 metric tons of rare earth oxide in the coming two to three months. (Including: Lanthanum and Cerium 11000 metric tons, Praseodymium-Neodymium 4,000 metric tons, Neodymium 1000 metric tons, Praseodymium 500 metric tons, Europium 200 metric tons, Terbium 150 metric tons, Dysprosium 400 metric tons, Yttrium 2500 metric tons.)