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Regulation for Rare Metal Management May Be Unveiled Soon

Despite the ongoing rare earth crime crack-down campaign by the MIIT, the “black rare earth” problem which has long plagued the industry is still not eradicated. This is also one of the reasons leading to long-term low level of rare earth prices. The current total exploitation control index for rare earth ore is issued by the Ministry of Land and Resources and the MIIT each year in stages.

Industry insiders pointed out that, when there is market demand, the industry will still prefer excessive production, this is because ministry-level total amount index is not compulsory law or regulation, and it lacks deterrence power. Once the “Management Regulation” is implemented and enforced, its legal binding force will be enhanced, which will result in more stringent control and regulation of illegal exploitation.

It has been learned separately that, at present total amount control index of China’s rare earth oxide is relatively low, in the future the quota is expected to be expanded. According to statistical data, in 2015 rare earth ore total exploitation amount was kept at 105,000 tonnes, this year the quota may be kept at the same level.

According to industry estimate, in 2016 market total demand is about 152,000 tonnes, in which North China ore demand is 125,000 tonnes, South China ore demand is about 27,000 tonnes, shortfall still exist in the market. The stringent control of authorized mines on the one hand leads to some idle capacity in six major rare earth groups, and low capacity utilization rate; on the other hand it also gives space of development to “black” industrial chain.

To this end, the state government is engaged in relevant work to increase total amount control index. Nevertheless, control and regulation of upstream exploitation right will not be relaxed, the overall legitimate capacity will still be kept stable.

While supervision system is being improved, regional industrial policy also provided extra assistance. Recently, Baotou Municipal Government compiled and unveiled “Policy Opinions on Further Accelerating Rare Earth Industry Development” (the Opinion”), proposing to build key rare earth raw material, new material and application product manufacture base in national and even global context. The “Opinion” identified a series of financial and comprehensive supporting policies, including safeguarding supply of rare earth raw materials, giving rare earth raw material purchase benefit and new material reward, enterprises can enjoy preferential benefits in electricity price and taxation aspects, and obtain innovation subsidy. It set up Baotou Rare Earth industry Development Fund and Rare Earth Industry Risk Investment Fund, and will strive to set up rare earth integrated bonded zone.