By Sunder Singh
Chinese authorities made an unexpected move in the first
week of January by issuing new guidelines for the export of
rare-earth minerals exported from the country.
The guidelines were jointly released by the Ministry of
Industry & Information Technology and 11 other government
agencies, and are expected to further restrict the East Asian
country’s exports of rare-earth minerals.
Under the released guidelines, authorities will strengthen
their oversight of the mining, refining and exporting of
rare-earth materials. They will follow the specified procedures
strictly and "check every batch of rare earth exports." And
there will be production shutdowns if companies are found to be
in violation of export rules.
"The move is about cracking down on rare-earth smuggling
rather than controlling exports. China is currently not putting
a cap on rare-earth exports," Chen Zhanheng, vice
secretary-general of the Association of China Rare Earth
Industry (ACREI), said.
Global supply of rare-earth minerals is heavily dependent on
China, and supply volumes are expected to be further squeezed
by the application of the new guidelines.
China’s grip on rare-earths supply is so strong
that, earlier this decade, a number of nations felt it
necessary to ask the World Trade Organization (WTO) to force
the nation to export more such minerals to global markets.
According to a US Geological Survey report published in
January 2018, global reserves of rare-earth metals are
estimated at a total of 120 million tonnes, and China alone has
37% of these, or 44 million tonnes of reserve.
Brazil and Vietnam jointly occupy second position, with 22
million tonnes of reserve each, followed by Russia with 18
million tonnes. India, Australia and the United States rank
fifth, sixth and seventh with 6.9 million tonnes, 3.4 million
tonnes and 1.4 million tonnes respectively.
Despite the availability of resources in these countries and
recent discoveries of rare-earth resources in Japan, China will
continue to play a significant role in the strategic rare-earth
market for the foreseeable future.
The Chinese government drastically limited domestic
production of rare-earth minerals during the second half of
2018. Following an announcement in August 2018, domestic
rare-earth production was restricted to 45,000 tonnes for
The country’s authorities had reduced the quota
for rare earth separation and smelting by about 36% compared
with the first half of the year. The semi-annual quota had been
raised to 70,000 tonnes for the first half of 2018, 40% higher
than in the first half of 2017, but this move was intended
principally to satisfy domestic market demand.
ACREI denied claims that the reduction was an attempt to
control the export markets. In a recent press release, it said:
"Despite the lower production quota in the second half [of
2018], production for the whole year rose sharply. The lower
production quota for the second half of the year was due to
huge production in the first half.
"It is true that the production quota for the second half
was lower than that of the first half, but production in the
first half was the largest [six-monthly volume] in five years,"
The annual quota for rare earth production for 2018 had been
raised to 120,000 tonnes from 105,000 tonnes. This was the
highest level since China began to set a quota for rare-earth
production in 2006.
Separately, a number of issues concerning Australian
rare-earth producer Lynas have created further jitters in
rare-earth consuming industries.
Operations run by Lynas in Pahang, Malaysia, have been under
scrutiny by activists and environmentalists for some time. And
a planned shutdown in December, which Lynas had warned about,
also caused alarms in rare-earth consuming industries.
Lynas began the processing of rare earth in Malaysia with
materials sent from Australia in 2012. There have been a number
of recent reports that the current Malaysian government, which
came to power in May 2018, has frequently expressed concerns
about operations at the plant.