China raises rare earths mining quota by 12.5pc

FE Team | Published: February 06, 2024 21:08:07

BEIJING, Feb 6 (Reuters) : China has set its first rare earths mining quota for 2024 at 135,000 tonnes, the country's Ministry of Industry and Information Technology said on Tuesday, 12.5 per cent higher than a year earlier.
However, the rise is smaller than the 19 per cent year-on-year increase seen in the first quota released in 2023.
Rare earths are a group of 17 elements used in products from lasers and military equipment to magnets found in electric vehicles, wind turbines and consumer electronics.
China, which accounts for 70 per cent of rare earths mining and 90 per cent of refined output, according to the United States Geological Survey, controls its supply through a closely watched quota system.
Allocations are typically issued twice a year, although there were three last year for the first time since the system was introduced in 2006.
China, also the largest consumer of rare earths, set the first quota for smelting and separation of the elements for the year at 127,000 tonnes, 10.4 per cent higher than in the first 2023 quota, but down from a rise of 18.3 per cent between early 2022 and 2023.
The first quota for mining output as well as smelting and separation was issued to China Rare Earth Group and China Northern Rare Earth Group High-Tech, the ministry said in a statement.
Four Chinese analysts told Reuters that the release of the first quota came earlier than expected this year, especially in the week before the Chinese New Year holiday, starting from Feb. 10.
Beijing last year issued the first quota in late March.
Rare earth prices have likely bottomed out and are poised to rise later this year on demand from electric vehicles (EVs) and wind power and as China is expected to pull back on expanding output quotas, analysts said.
The total mining output quota in 2023 hit a record high of 255,000 tons and the total smelting and separation quota was also a record at 243,850 tons, up 21.4 per cent and 20.7 per cent from a year earlier, respectively.
"If the annual growth rate for the quota is below 13 per cent, the market will shift to a shortage from a glut," said one of the analysts, requesting anonymity as he is not authorised to speak to media.