China opens up to foreign investment in graphite, rare earths

By Carrie Shi
Published: Wednesday, 04 July 2018

China’s government seeks to open some resources to outside investment by granting permits to foreign companies, in areas including graphite and rare earths.

An update to an administrative document in China will widen the access available to foreign investors in certain industries, including graphite and rare earths, when it takes effect on July 28, Industrial Minerals learnt this week.

The update is to the Special Administrative Measures for Admittance of Foreign Investments (negative list). It will open up market entry in 22 areas including banking, transportation, manufacturing, infrastructure, energy, agriculture and mineral resources.

In the mineral resources sector specifically, the government has canceled the restriction on access to foreign investment in graphite exploration and exploitation.

It has also removed restrictions on the smelting and separation of rare earths, which are currently limited to joint ventures and cooperations with Chinese companies.

Furthermore, restrictions on foreign investment access to tungsten smelting has also been canceled.

China will also cancel restrictions on foreign capital stock ratios for manufacturers of special vehicles and new energy vehicles (NEVs). Restrictions on foreign capital stock ratios will be canceled for commercial vehicles in 2020, and for passenger vehicles in 2022.

But the government continues to prohibit foreign investment in the exploration and exploitation of tungsten, molybdenum, tin, antimony, fluorspar, rare earths and radioactive minerals in the new update.

The revision of the negative list has been interpreted as a move by the government to promote its willingness to remove barriers to entry for foreign investors, and was welcomed by some market participants who viewed it in that light.

"The opening of foreign investment in the graphite market may bring new opportunities and... development of more high-quality and high-end products," a graphite market participant said.

Graphite is currently mainly used in refractories, ceramics, petrochemicals and the cement industry, as well as in lithium-ion batteries as the main anode material.

According to assessments by Industrial Minerals on June 28, the fob China price for flake graphite, 94-97% C, -100 mesh, was $655-790 per tonne, while the price for +80 mesh material of the same carbon content was $1,050-1,210 per tonne. Both prices were unchanged from the previous week.

The update to the list comes at a significant time because 2018 marks the 40th anniversary of China’s reform and opening. It was announced on June 28 by the National Development & Reform Commission together with the Ministry of Commerce.

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