China tightens procedural grip on rare earth mineral exports

By IM Staff
Published: Friday, 11 January 2019

Strict observance and application of new guidelines are intended to limit smuggling of rare-earth materials, but the country’s dominant position in the market makes this an international concern.

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 July-December.

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," it added.

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.


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