Is China curbing rare earth production to raise prices as its global dominance wanes?
- Potential decrease in mining output this year, plus big demand in sectors that use critical metals, could help raise rare earth prices down almost 20 per cent this year
Beijing may be looking to rein in its allocated production quota for China’s rare earth elements – including strategically important metals used in ubiquitous items such as smartphones and in critical defence equipment – amid a decline in domestic prices while overseas development accelerates.
On Tuesday, the Ministry of Industry and Information Technology and the Ministry of Natural Resources jointly set the upper limit for the year’s second batch of rare earth mining output at 135,000 tonnes, and that of smelting at 127,000 tonnes. Both figures are the same as the first batch announced in February.
Combined, the two batches this year respectively stand at 270,000 tonnes and 254,000 tonnes, representing year-on-year increases of 5.9 per cent and 4.2 per cent from the first two batches of quotas released last year.
Beijing often issues two batches a year, but 2023 marked an exception with a third one. If there are no subsequent batches released this year, the year-on-year increases would be smaller than the 21.4 per cent and 20.7 per cent seen last year.
And that would mean “that the growth rate of the domestic supply of rare earths would be narrowed down this year”, according to a research note published by Topsperity Securities on Wednesday.
Such a decision, “together with the boost of demand from the new-energy-vehicle and wind-turbine sectors, is expected to drive a rebound of rare earth prices”, the note said.
