China’s Ministry of Land and Resources (MLR) has set its total mining output quotas of rare earth at 105,000 tons this year – up nearly 12% from 2013.

“The mining quotas for rock-type light rare earths increased by 11,200 tons (REO) or approximately 15% higher than the previous year”, the MLR said on June 6th. In 2013, the MLR set an exploitation quota for rare-earth concentrate at 93,800 tons (REO), of which 75,900 tons consisted of rock-type light rare earths and the remaining 17,900 tons was of the ion-absorption-type medium and heavy rare earths.

“The ministry will keep exercising total control over the exploitation placing a limit on the total volume of rare earth and tungsten to be mined. The output quotas of tungsten will remain unchanged from last year’s levels and there will be a cap of 89,000 tons for tri-oxide in 2014. While the ministry shall no longer maintain total control over the exploitation quota for antimony as of this year,” according to the statement.

Moreover, the MLR also announced that will not grant any new licenses for tungsten and rare earths prospecting and mining before June 30, 2015, except for those state-sanctioned projects involving mergers and reorganizations as well as optimal distribution.

Chinese authorities already said, in February, that China would implement a system of classified management for LREE and HREE in order to implement the LREE mandatory quotas for this year. Therefore, it is not surprising that the MLR shall raise the mining output quotas for light rare earths as overseas demand recovers such that the government will no longer impose “excessive controls” over the production of light rare earths.

The figures from the preliminary statistics released by the China Customs Statistics Information Centre shows that China’s exports of rare earth ores and metals in the first five months this year rose 60.9% year on year to 12,544 tons, valued at USD $177.034 million. The export volume of rare earths in May alone rose 42% year-over-year to 2,391 tons.

China currently accounts for around 90% of the world’s rare earth output, despite the domestic mining quotas, maintaining a stable output from 2011 to 2013 of 93,800 tons; however the actual illegal mining and smuggling output of rare earths was in excess of 40,000 tons each year and this remains rife in southern China. In particular, the illegal mining of ion-absorption-type medium and heavy rare earths ores is affected as these generate high profits while being easily mined. There is also the problem of illegal production of rare-earths and the fact that it easily reaches downstream consumers through a variety of channels, such as rare-earth recycling companies of which there is a multitude.

Driven by high profits, China’s rare-earth recycling industry has been attracting more and more domestic investors in the past three years. According to preliminary statistics released on June 9th by the Ministry of Industry and Information Technology (MIIT), there are 67 rare-earth recycling projects across the country, of which the annual capacities of rare earth NdFeB waste processing surpassed 200,000 tons so far. Last Monday, the MIIT announced on its website:

“In the name of resource recovery and comprehensive utilization, some rare earth recycling enterprises purchased and processed illegal rare earth mineral products used with its smelting and separation production line, while trading in the black market, which has seriously disrupted the rare earth market order, the government will resolutely crack down on various illegal activities.”

In an effort to clean up the illegal rare earth recycling enterprises, The MIIT has urged local governments to immediately regulate the rare earth recycling sector, while strengthening their supervision over the industry. The Chinese government exercises strict control over of the total volume of rare earth smelting and separation in order to rectify the chaotic and ill-regulated rare earth recycling sector. China also plans to introduce a mandatory rare earth production planning quota for legally operating rare earth recycling enterprises in the second half of this year according to the MIIT.

The Chinese government will further regulate rare earth recycling, in order to strengthen the position of the state-backed large rare earth groups.

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