Sources say China plans to add to its rare earths stockpile

August 6, 2014

According to a least two sources, China has bought 10 Mt (11 million st) of rare earths in the last week as the country stockpiles the metals amid international pressure to ease export quotas, Bloomberg reported.

The State Reserve Bureau paid above-market prices for the rare earths, according to the people, who asked not to be identified because they were not authorized to speak publicly about the purchases. China accounts for 90 percent of global rare earths production.

Peng Bo, an analyst at China Merchants Securities Co. told Bloomberg that the move might be an effort by China to help prop the price of rare earths which have declined since 2011. In March, the World Trade Organization sided with the U.S., Japan and Europe in ruling that China hadn’t adequately justified imposing export duties and quotas on rare earths and other resources.

“China is facing imminent pressure to abolish the export quota, so stockpiling is part of the policy reaction to help prop up prices and keep more of the resources at home for future use,” Peng told Bloomberg.

The country cut mining permits and imposed production and export quotas in 2007 to reduce pollution and conserve supplies. China has also encouraged consolidation among rare-earths miners and promoted domestic trading.

In June, China set mining quotas for heavy rare earths and tungsten at the same levels as last year, while raising the quota on more abundant light rare earths.

China may stockpile more medium-to-heavy rare earths this year such as terbium, lutetium and yttrium, which are used in applications ranging from lasers to nuclear reactors, said Peng.

China’s own industrial sector, in its rudimentary form, isn’t yet able to make full use of the country’s output, Peng said. The government is likely to hoard these elements for future use, she said.
 

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