China raises annual rare earth output quotas to record high

China lifted its annual rare earth output quotas on Friday by 10 per cent to record-high levels for 2019, potentially easing fears the world’s dominant producer of the group of 17 prized minerals will restrict supply.

Beijing in late May raised the prospect of weaponising its control of rare earths, used in everything from consumer electronics to sophisticated military equipment, in its trade war with the United States, but has yet to announce any formal restrictions.

China is home to at least 85 per cent of global rare earth processing capacity, according to Adamas Intelligence.

The full-year rare earth mining quota has been set at 132,000 tonnes for 2019 and the smelting and separation quota at 127,000 tonnes, the Ministry of Industry and Information Technology said in a statement.

China has now increased the allowances for two years in a row and an official at the Association of China Rare Earth Industry confirmed the numbers were record highs.

They imply a quota of 72,000 tonnes for mining in the second half of 2019, up more than 54 per cent from an unusually low level a year earlier.

The quota hikes could be seen as a message that China has the capability to increase supply, making life difficult for (rare earths) under development in regions such as the Americas, EU and Australia.

China typically issues the rare earth quotas twice a year for six-month periods. In March, the first-half quotas were set at 60,000 tonnes for mining and 57,500 tonnes for smelting and separation.

The late release of the full-year quotas comes as Beijing and Washington work to iron out the details on a so-called “phase one” deal to end trade hostilities. China’s rare earth exports in October rose by 1.9 per cent from the previous month to 3,639 tonnes, according to customs data.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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