China raises rare earth quota as demand shoots up
Published: Feb 20, 2021 01:26 AM

Rare earth Photo: VCG

The Ministry of Industry and Information Technology and Ministry of Natural Resources have confirmed that the quota for the first batch of rare earth mining this year will be 84,000 tons, a significant increase from the 66,000 tons in 2020.

Experts said that the move was timely as demand for rare earths has increased amid the rapid resumption of manufacturing.

Rare earth prices have risen recently, with praseodymium oxide, a rare earth oxide, reaching a high of over 400,000 yuan per ton.

"The high price reflects the strong demand for rare earths, and under this situation, if we want to take advantage of domestic resources, we must increase domestic production," Chen Zhanheng, an industry expert, told the Global Times on Friday.

Rare earths are subject to strict production volume controls in China. The quota for total rare earth mining was 132,000 tons in 2019 and 140,000 tons in 2020, official data showed.

In the past, the capacity utilization rate of the six major rare earth groups was only 45 percent. However, several industry analysts that the Global Times reached on Friday predicted that the capacity would be greatly lifted this year.

If the second batch of rare earths in the second half of this year is anything like the first in terms of the high quota, the overall capacity utilization rate of Chinese rare earth companies could achieve an unprecedented increase, Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Friday.

Chen also agreed and predicted that the capacity of the annual quota in 2021 could be up to 70 percent, equivalent to 162, 000 tons.

The increase will further consolidate China's leading position in the global supply of rare earths and reduce the dependence on imports, another industry expert told the Global Times on condition of anonymity.

China produces more than 90 percent of the world's rare earths. In 2020, China exported 35,400 tons of rare earth products, 23.49 percent less than 2019, partially due to the lower demand worldwide amid the epidemic and rising supplies from elsewhere, including the Australian company Lynas.

The rising quota may safeguard China's leading position in the global supply chain, while also showing the country's continuous efforts to meet global demand.
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