China Unveils Rare Earth Production Quotas for Second Half of 2022
Big increase for LREO production, HREO held flat for fifth year in a row
Earlier this month, China’s Ministry of Industry and Information Technology issued the second installment of rare earth production and processing quotas for 2022.
Overall, the quotas allow for a 25% increase in domestically-mined and separated TREO production this year, with all the increase allotted to LREO producers in the nation (primarily China Northern Rare Earth Group) and no increase to the nation’s HREO producers for the fifth year in a row.
Over the past five years, the total annual mining quota issued to producers in China has doubled, from 105,000 tonnes in 2017 to 210,000 tonnes in 2022. More specifically, however, the nation’s LREO production has increased by 119% since 2017 while its HREO production has increased by just 7% over the same period.
Adamas take: By outsourcing heavy rare earth supply growth to neighboring Myanmar over the past five years, China’s processors have been largely able to keep up with global demand while preserving dwindling resources at home. However, with inflows from Myanmar down to a trickle in 2022 on account of the nation’s coup and strict pandemic control measures in China, we see significant potential for a near-term HREO supply crunch considering the latest quota announcement.
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