First Batch of Rare Earth Mining and Smelting Quotas this Year to be Released Soon

SHANGHAI, Feb 22 (SMM) - It is learned that the first batch of rare earth mining and smelting quotas this year will be released soon.

Review on the first batch of rare earth mining and smelting quotas in past four years

Analysis: Growth of rare earth rock ore mining quotas is forecast to be less than 20% this year

According to SMM data, rare earth mining and smelting quotas have been on the rise in recent years. The quotas for rare earth mining in 2022 rose by 25% on an annual basis, among which the quotas for light rare earth mining were up by 28% and those for middle and heavy rare earth mining were unchanged. It is the similar case in 2021 when the quotas for rare earth mining were up by 20% on the year, and the increase all stemmed from light rare earth mining.

The quotas for medium and heavy rare earth mining remained unchanged for at least four consecutive years in China for two reasons. On the one hand, the approach used in ion-absorbed rare earth mining will pose a greate threat to the ecological environment. On the other hand, China's medium and heavy rare earth resources are scarce, so the government did not approve mining quotas for the sake of protecting important strategic resources.

SMM estimates that the quotas for ion-abosorbed rare earth mining will not increase this year, and the growth of rare earth rock ore mining quotas will be less than 20%.

Rare earth prices are stable so far

The rare earth spot prices extended the previous fall last week. The inquiries and transactions of rare earth oxide and metal were still thin, and downstream magnetic material companies received few new orders.

Some leading magnetic material companies mainly focus on the delivery of long-term orders placed before the Chinese New year, with no signs of new orders, and some small magnetic material factories even had no orders to be delivered. In addition, the prices of rare earth metals continued to decline, and magnetic material plants thus took a wait-and-see stance, resulting in slack trades in the rare earth market. 

According to the latest survey by SMM, the prices of rare earth have been relatively stable this week. SMM price shows that rare earth carbonate was quoted at 55,300-55,600 yuan/mt as of February 21, with an average price of 55,450 yuan/mt, flat from the previous trading day.

Forecast: Rare earth prices may weaken in the near term

On the supply side, the production of rare earth separation plants and metal factories has been normal. However, the demand for rare earth has contracted significantly due to insufficient new orders received by magnetic material enterprises. SMM thus predicts that rare earth prices will weaken in the short term.