An unprecedented third batch of rare earth mining and smelting quotas was announced by China’s Ministry of Industry and Information Technology

In an unprecedented move, China’s Ministry of Industry and Information Technology announced a third batch of the typically biannual rare earth mining and smelting quota for Chinese operators. The additional quota saw China Northern Rare Earths Group (CNRE) assigned an additional 12kt REO in hard rock mining quotas, along with an 11.0kt REO addition to its smelting and refining quota. China Rare Earths Group (CREG) was also awarded an additional 3.0kt hard rock mining and 2.85kt REO smelting and refining quota. The third batch of quotas brings the total rare earth mining quota for hard rock sources to 235.85kt REO, an increase of 23.5% year-on-year. There was no additional mining quota for ionic clay resources in the third batch, which remained at 19.1kt REO for 2023, exclusively for CREG. Total smelting and refining quota increased to 243.85kt REO in 2023, representing a 21.3% increase from 2022, with the quota assigned to CNRE increasing by 27.5% and to CREG (including Xiamen Tungsten and Guangdong Rare Earth Group) by 10.3%. 

The increase in quota observed in 2023 represents the largest quota increase by volume to both the mining and smelting-refining quota, with the mining quota being increased by 45kt REO and smelting-refining quota by 42.85kt REO. The focus on increasing quotas for hard rock mining with quotas for ionic clay production remaining unchanged year-on-year indicates the Chinese government is comfortable with its current level of reliance on imported heavy rare earth feedstocks from Myanmar, Laos and various heavy mineral sand sources. For light rare earth feedstocks, the increase in quota allocation has the potential to further depress prices for key rare earth products used in permanent magnets such as Nd and Nd-Pr oxide in 2024, as market availability is improved in China.