China produces nearly 90% of the world’s rare earths and its downstream industry consumes 70% of the 17 elements used in a variety of hi-tech industries including renewable energy, medical devices and defence.
Following a World Trade Organization ruling, China is abolishing its decade-old export quota system for rare earths and is due to lift export tariffs of 20%-plus in May.
Beijing is also consolidating the industry under six large organizations led by the newly-named China North Rare Earth Group.
The Inner Mongolia-based company operates the Bayan Obo iron ore mine and before the 2010 price surge after Beijing reduced export quotes, produced more than half the world’s REEs as a by-product.
Apart from combining mine output China North Rare Earth and the five groups are being vertically integrated to help modernize the country’s mostly low-tech rare earth separation and refining businesses.
Over the weekend the country’s Ministry of Industry & Information Technology released rare earth production quotas for 2015.
Rare earth oxide (REO) mining quotas were set at 52,500 tonnes while smelting and separating limits came in at 50,050 tonnes.
Productions quotas were up 12% from those set last year, while refining can expand by 10.6%. 60% of the mining quota were allocated to China North Rare Earth Group.
Statistics from China’s Rare Earth Industry Association shows that after a slump in January ahead of the country’s new year holidays, export of REEs recovered in February, jumping 24.7% to 2,052 tonnes year on year.
After rallying at the beginning of the year the price index (a rolling 20-day average of REE prices across the industry) has now turned down again.