China hikes rare earth output quota as industry grapples with coronavirus

February 19, 2020

The coronavirus outbreak has killed more than 2,000 people in China and has caused shutdowns of huge swaths of China. According to a report from CNBC, there had been more than 70,000 reported cases of the virus as of Feb. 19 and the economic impact could affect more than 5 million businesses worldwide. Among those is China’s rare earths sector which has been running at 20 percent of its normal capacity, according to a report in the Global Times, published by the official People’s Daily newspaper.

To counter that impact, China has raised its output quota for rare earth minerals in the first half of 2020 by 10 percent from a year earlier. The quotas are typically issued twice a year and closely watched as a supply indicator.

Reuters reported that the first rare earth mining output quota for 2020 was set at 66 kt (73,000 st), equal to 50 percent of last year’s total allocation of 132 kt (145,000 st) , according to a notice from the Ministry of Natural Resources and the Ministry of Industry and Information Technology.

That is up from 60 kt (66,000 st) for the first half of 2019.

The notice made no mention of a smelting and separation quota for the processing of rare earth ore into material that can be used by manufacturers. The smelting and separation quota is usually issued at the same time as the mining quota and was 57.5 kt (63,400 st) in the first half of 2019.

China will issue the mining output quota for the second half of 2020 in the second quarter, said the notice, which also gave the first-half tungsten concentrate output quota as 52.5 kt (58,000 st).

The coronavirus outbreak has also hit consumption of rare earths at magnet and catalyst manufacturers, Merriman said. “So whilst supply is being reduced, demand requirements are also being limited,” he added.

Virus-related domestic and international transport restrictions, which are affecting distribution of material to customers and for export, are the main issue facing China’s rare earth industry, David Merriman, a manager at consultancy Roskill said.

“If this is not resolved within the coming weeks then we would expect supply to become stressed and would likely see a price reaction - though likely to be limited by state stockpile releases,” he added.

Photo: Rare earth shipment from China. Shutterstock.

 

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