BEIJING, May 18 -- China, the world's largest producer of rare earth, will introduce a rare earth stockpile in the city of Baotou in Inner Mongolia and is seeking to enact tougher rules to raise barriers of entry into the nation's rare earth industry, the state-controlled Xinhua news agency reported Sunday.
The stockpile is part of China's efforts to increase control over rare earth prices. The government has argued that unregulated exports in the past by a fragmented mining industry depressed global prices and set back the industry's ability to leverage on an important raw material for environmentally-friendly technology, for which China accounts for 95% of the world's output.
Baotou is home to China's largest rare earth producer, Baogang Group, which will also set up the stockpile by building 10 facilities for rare earth oxides, Xinhua said, citing Ministry of Land and Resources officials.
Baogang Group's listed unit, Inner Mongolia Baotou Steel Rare-Earth Hi-tech Co. (600111.SH), will receive an annual subsidy of CNY30 million ($4.4 million) from the government of the Inner Mongolia Autonomous Region, the municipal government of Baotou and Baogang over a two-year period, the state-run China National Radio reported on its website Monday.
The stockpile comes at a time when China's Ministry of Industry and Information Technology has just issued a circular proposing higher barriers to entry into China's rare-earth industry.
The proposal, published last Thursday, set detailed standards on the layout conditions, output size, technology and equipment, energy consumption and environmental protection for new entrants into the industry.
Under the proposal, light rare earth mining ventures must have an annual ore processing capacity of 300,000 metric tons, MIIT's website said.
Ionic rare earth mining ventures must have an annual rare earth oxide production capacity of 3,000 tons, the proposal said.
Mixed rare-earth smelting and separation projects must have a rare-earth oxide production capacity of 8,000 tons a year, it said. Rare-earth metal smelting projects must have a production capacity of no less than 1,500 tons a year.
Existing projects that don't meet these standards should work to meet these new standards within two years, either through mergers and acquisitions or technological upgrading, the proposal said.
The ministry is still inviting public comment on the proposal. It wasn't clear when the proposal might be enacted.