China Rare Earth Production Quota Announcement Looming
Big increase needed to supplement Myanmar, U.S. supplies
Following an outlier of a year in 2022, the industry eagerly awaits China’s release of the first installment of rare earth production quotas for 2023.
Overall, with inflows to China from Myanmar falling last year (resulting in a material drop in global Dy and Tb production), and MP Materials likely to slow its own exports to China in the near-term as its ramps up domestic processing, we believe China needs to boost production quotas by 15% to 20% simply to fill the gaps.
As such, Adamas expects the initial quota for 2023 will see a 20% to 25% increase over the year prior. As in recent years, we expect all (or at least the vast majority) of the quota increase to be issued to light rare earth producers in the nation, such as China Northern Rare Earth Group, with little-to-no increase in heavy rare earth quotas (due to resource scarcity) despite uncertainty about future supplies from Myanmar.
Last year, the first quota was announced in January. In years prior, the quota was announced in late February. For 2023, we expect the announcement will come any day.
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