China Raises Rare Earth Production Quotas To Record Highs As Prices Rise – Steel, Aluminum, Copper, Stainless Steel, Rare Earths, Metals Prices, Forecasts

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China has already played a sinister role in restricting the production and export of critical rare earth metals, usually salts, used to produce a multitude of products. These products include magnets for consumer electronics and electric cars, defense equipment and advanced ceramics.

But while the country has deliberately created a near-monopoly position in the global rare earth refining market, it has created a horrendous environmental problem in the process.

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Consolidation of rare earths and rising prices

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In an effort to clean up its environmental law and to better control what had become a Wild West mining and refining landscape, Beijing engineered a consolidation in the industry into fewer but larger entities.

However, that was when the criticism started, as China capped its exports, causing prices to soar.

Much of it was short lived. Prices returned to land after peaking in 2017. However, prices have risen sharply again this year due to the surge in demand, both in China and abroad.

Prices have gone up 20-50% this year alone. Growing demand fueled a bidding war for supply in a tight market. With China holding some 85% of the world’s refining capacity and the mine’s only supply chain to refined products, it not only has a unique position, but a unique responsibility in the market.

Perhaps in part to try to avoid accusations of market manipulation, Beijing has increased production this year. Production is up 20% to the highest levels on record, according to Reuters.

The Ministry of Industry and Information Technology said mining production of rare earths in 2021 was set at 168,000 metric tons. This is an increase from 140,000 metric tonnes last year.

Meanwhile, the 2021 quota for smelting and separation – or the transformation of rare earths into a form usable by manufacturers – is 162,000 tonnes, also up 20% from the previous year.

Domestic demand

Although by far the world’s largest miner of rare earth minerals, domestic demand for refined products is so great that China remains a net importer, in particular – and somewhat ironically, considering all the coverage. of China compared to the United States in the rare earth market. – from the United States, but also from Myanmar.

In practice, the ETR supply chains of the United States and China are closely linked. The United States is a very important minor. However, there is a lack of economical means to refine the ores into usable compounds. Meanwhile, China is a major minor. However, there is a lack of sufficient supply to meet domestic and international demand for refined products, hence bilateral trade.

The United States is contributing hundreds of millions of dollars to support the development of a national refining industry. It does this through tax breaks, direct grants and guaranteed contracts.

But in such a highly regulated market, environmental, energy, and employment costs have made refining difficult in the United States.

Perhaps the last part of the puzzle, the high prices, will be enough to make full domestic refining a reality again in the United States.

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