The first batch of quota for rare earth mining, smelting and separation in 2021

SHANGHAI, Feb 20 (SMM) — MIIT and Ministry of Natural Resources issued the first batch of quota for rare earth mining, smelting and separation in 2021, with the quota of 84,000 mt for rare earth mining and 81,000 mt for smelting and separation, up 18,000 mt or 27% and 17,500 mt or 28% respectively from the previous year.

Rare earth mining, smelting and separation quotas in 2021 accounted for 60% of the 2020 quotas. From the changes in the first batch of quota for rare earth mining, smelting and separation over the years, SMM expects the first batch of quota in 2021 to account for nearly half of the annual quotas.

In terms of rare earth mining quotas, the proportions of the first batch of light rare earth mines and medium and heavy rare earth mines have undergone subtle changes in recent years, which further reflects China’s increasing emphasis on medium and heavy rare earth resources.

First of all, in terms of specific values, the proportion of light rare earth mining quotas rose slightly from 83% in 2016 to 86% this year. Correspondingly, the proportion of medium and heavy rare earth mining indicators decreased from 17% in 2016 to 14% this year.

Secondly, although the changes in the first batch of light rare earth mining quotas and medium and heavy rare earth mining quotas over the years are very close, the changes of the light rare earth mining quotas and medium and heavy rare earth mining quotas in recent two years are quietly diverging. The year-on-year growth rate of light rare earth mining quotas gradually widened the gap with the mining quotas of medium and heavy rare earth mines, which once again reflects China's increasing emphasis on medium and heavy rare earth resources.

In addition, in the notice of total quotas for rare earth mining, smelting and separation, a new clause has been added to the situation of enterprises that are not allowed to allocate quotas, that is, "which does not meet the management requirements of tailings ponds such as the Regulations on the Safety Supervision and Management of Tailings Ponds". It reflects that China has paid more attention to environmental protection issues in the production of rare earth. It focuses on both economic development and environmental protection. In the future, China's rare earth industry is expected to accelerate high-quality and healthy development.

SMM believes that the significant increase in the quota for rare earth mining, smelting and separation is on the one hand to cater to the increasing demand for rare earth in the downstream sector, and on the other hand to prevent prices of rare earth from recurring the surge in 2017.

The last time raising the index for quota for rare earth mining, smelting and separation was in 2018. After the last year (2017), the representative rare earth species, praseodymium and neodymium oxide, experienced a sharp increase, leading to midstream processing companies to restock, and traders to stockpile. There was a short vacuum for market demand after the phased restocking, and then experiencing a round of plunge.

Finally, the announcement of the quotas this time is earlier than previous years. Combined with the "Regulations on Rare Earth Management (Draft for Comment)" announced at the beginning of the year, it reflects that China's control of the rare earth industry has become more mature and stable. 2021 will coincide with the first year of the "14th Five-Year Plan". The rare earth market in 2021 may be different from last year. SMM will continue to pay attention to industry trends.