2012 Chinese Rare-Earth Export-Quota Allocations – An Update

by Gareth Hatch on May 17, 2012 · 10 comments

in China, News Analysis, Rare Earths

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Earlier today the Chinese Ministry of Commerce announced an update to the 2012 allocations of rare-earth export quotas that were first issued in December 2011 (you can see my original article on this topic here). This follows a number of other recent announcements from China, of relevance to the export quotas. The following article summarizes the quota situation as of today, May 17, 2012, and provides updated numbers and allocation information.

In the original first round of allocations, a total of 24,904 t of export quotas were allocated to companies that were divided into two groups. The first received confirmed quota allocations, while the second received only provisional allocations. Companies were placed into one of these groups based on their progress towards the implementation of new pollution-control measures, with the latter group being told that they would get their allocated quotas if they met the various requirements by July 2012. They were further told that failure to meet the new requirements by this date would result in their quotas being re-allocated to other companies.

On May 10, 2012 the Chinese Ministry of Environmental Protection published a list of 41 rare-earth companies that had passed the pollution-control inspections mandated by that Ministry last year. Included on that list were most (but not all) of the companies previously allocated provisional export quotas, by the Ministry of Commerce.

Today’s announcement from the Chinese Ministry of Commerce included some minor adjustments to the quotas allocated in this second batch of confirmed allocations, resulting from the subsequent inclusion of data relating to the last two months of 2011, that was not included in the original calculations for quota allocations. In addition, the Ministry announced the consolidation of the quota allocations for three separate companies (Changshu Shengchang Rare Earth Smelting Co., Funing Rare Earth Industry Co. and Jiangsu Geo Quin Nano Rare Earth Co.) into a single allocation for their parent company (Chalco Rare Earth (Jiangsu) Co.).

So as it stands today, the updated first round of quota allocations totals 25,150 t. Assuming that the Ministry of Commerce sticks with its December 2011 plan for the first round of allocations to represent 80% of the quota allocations for 2012, then the total for 2012 will be an estimated 31,438 t of rare earths, slightly higher than last year.

Here’s how the three groups of allocations break down, as of today:

First set of allocations of Chinese rare-earth export quotas, for 2012.
Source: Chinese Ministry of Commerce (1, 2, 3)
Allocation Type Allocation (tonnes)
LRE M/HRE Total
Confirmed – 1st Batch 9,095 1,451 10,546
Confirmed – 2nd Batch 9,490 1,190 10,680
Confirmed – Sub-Total 18,585 2,641 21,226
Remaining Provisional 3,511 413 3,924
Total 22,096 3,054 25,150

Let’s now break this down further – first, here are the companies that have received confirmed quota allocations, either in the first batch issued on December 27, 2011 (shown in green), or the second batch issued on May 17, 2012 (shown in red). They are further divided into sub-lists for Chinese and Chinese / non-Chinese joint-venture (JV) companies. The two sub-lists are sorted from highest-to-lowest total allocation:

First set of confirmed allocations of rare-earth export quotas, issued in two batches to
individual companies for 2012. Source: Chinese Ministry of Commerce (1, 2)
Exporting Company: Chinese-Owned Allocation (tonnes)
LRE M/HRE Total
China Minmetals Corporation* 1,267 199 1,466
Gansu Rare Earth New Materials Co. 1,290 163 1,453
China Nonferrous Import-Export Co. Jiangsu Branch 1,101 202 1,303
Sinosteel Corporation 1,010 145 1,155
Baotou Huamei Rare Earth Hi-Tech Co.** 984 61 1,045
Leshan Shenghe Rare Earth Technology Co. 917 112 1,029
Guangdong Rising Nonferrous Metals Group Co. 866 141 1,007
Chalco Rare Earth (Jiangsu) Co. 739 231 970
Ganzhou Chenguang Rare Earth New Materials Co. 800 117 917
Yiyang Hongyuan Rare Earth Co. 832 34 866
Grirem Advanced Materials Co. 716 135 851
Xuzhou Jinshi Pengyuan Rare Earth Materials Co. 754 87 841
Ganzhou Qiandong Rare Earth Group Co. 688 144 832
Shandong Pengyu Industrial Co. 594 88 682
Jiangxi South Rare Earths Hi-Tech Co.* 593 68 661
Jiangxi Rare Earth & Rare Metals Tungsten Group Co. 647 11 658
Ganxian Hongjin Rare Earth Co.* 288 42 330
Exporting Company: Chinese / Non-Chinese JV Allocation (tonnes)
LRE M/HRE Total
Baotou Rhodia Rare Earth Co. 1,463 129 1,592
Jiangyin Jiahua Advanced Material Resources Co. 899 154 1,053
Liyang Rhodia Rare Earth New Materials Co. 714 227 941
Yixing Xinwei Leeshing Rare Earth Co. 750 109 859
Baotou Tianjiao Seimi Rare Earth Polishing Powder Co.** 385 17 402
Baotou Santoku Battery Materials Co. 288 25 313
Sub-Total: Chinese-Owned 14,086 1,980 16,066
Sub-Total: Chinese / Non-Chinese JVs 4,499 661 5,160
Total 18,585 2,641 21,226

* Part of China Minmetals Group, which was allocated a confirmed total of 2,457 t.
** Part of Baogang Group, which was allocated a confirmed total of 1,447 t.

Next, are the companies that received quota allocations on December 27, 2011, which were provisional on them meeting the new pollution-control standards, and which were not converted to confirmed quotas in the May 17, 2012 announcement. The list is again divided into sub-lists for Chinese and Chinese / non-Chinese JV companies, which are sorted from highest-to-lowest total allocation:

Remaining provisional allocations from first set of rare-earth export quotas, issued to
individual companies for 2012. Source: Chinese Ministry of Commerce (1, 2)
Exporting Company: Chinese-Owned Allocation (tonnes)
LRE M/HRE Total
Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co.** 997 111 1,108
Inner Mongolia Baotou Hefa Rare Earth Co.** 792 84 876
Guangdong Zhujiang Rare Earth Co. 124 27 151
Exporting Company: Chinese / Non-Chinese JV Allocation (tonnes)
LRE M/HRE Total
Zibo Jiahua Advanced Material Resources Co. 1,131 142 1,273
Huhhot Rongxin New Metal Smelting Co. 425 44 469
Pingyuan Sanxie Rare Earth Smelting Co. 42 5 47
Sub-Total: Chinese-Owned 1,913 222 2,135
Sub-Total: Chinese / Non-Chinese JVs 1,598 191 1,789
Total 3,511 413 3,924

** Part of Baogang Group, which has a remaining provisional allocation of  1,984 t in total.

Finally, here is a comparison of the quota allocations for the past three years (compare to the projected total of 31,438 t of quota for 2012):

Export quotas for the Chinese rare-earth industry
Source: Chinese Ministry of Commerce
2009 2010 2011
Sub-group H1 (t) H2 (t) H1 (t) H2 (t) H1 (t) H2 (t)
Chinese-owned 15,043 18,257 16,304 6,208 10,762 12,221
Chinese / Non-Chinese JV 6,685 10,160 5,978 1,768 3,746 3,517
Sub-Total 21,728 28,417 22,282 7,976 14,508 15,738
TOTAL 50,145 30,258 30,246

The most prominent companies still in the provisional category are two rare-earth enterprises that are part of the Baogang Group (Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co and Inner Mongolia Baotou Hefa Rare Earth Co.) and one of the enterprises operated by Neo Material Technologies (Zibo Jiahua Advanced Material Resources Co.).

Given the individual adjustments made when converting provisional to confirmed quota allocations, we might expect to see slight changes to the remaining provisional quota allocations, if and when these companies are approved by the Ministries of Environmental Protection and Commerce, and finally receive their allocated quotas.

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1 Arlen May 18, 2012 at 1:16 am

Thank you again, Gareth, for another helpful and timely posting.
If you have easy access to them, it would be interesting to see the numbers for the percentages of the quotas for the last few years which were actually used.
Arlen

2 blackjack May 18, 2012 at 1:56 am

thanks Gareth

one wonders what the Chinese are really up to.

are they keeping the REE’s for their own use
are they trying to control world prices
or are we all thinking to deeply into it

we’ll know soon enough
eh?

3 Giuseppe Buzzetti May 18, 2012 at 2:34 am

Dear Gareth

Many thanks for your continual and accurate updating of REE sources and availability.
Such informations are very useful for anybody who wants anderstand the present situation and make some prediction about the future.

Thank you again

G Buzzetti

4 christina May 18, 2012 at 8:21 am

Hi Gareth,
Thank you for all these informative update. I wonder if these quota are only for the rare earth metal companies, since I cannot see the names of NdFeB manufacturers, such as Sanhuan and Yunsheng.
All the best,

Christina

5 E. Lee Huston May 18, 2012 at 9:29 am

Hi Gareth,
Thanks for the update. Here’s my question:
What enterprises operated by Neo Material have made the approved list?
— Lee

6 Ron May 18, 2012 at 11:28 am

Hi Gareth,
Thanks again for your dilligence & finger on the pulse.
I wonder what, if any, effects going forward regarding the ill concieved US tariff on China photovoltaic solar panels will have on the WEE & specifically the US?

Best regards, Ron

7 robit May 18, 2012 at 12:59 pm

I believe this question is another phrasing of Christina’s question: has there been any clarifying of how the quotas apply to the different ree-containing-materials that are exported and how the ree-content-weight-to-total-weight-rato is calculated against the quota? That seemed to be quite a confusing factor in the last few quota specifications.

8 Gareth Hatch May 18, 2012 at 1:14 pm

@Arlen: quota utilization was 66% in 2008, 57% in 2009, 77% in 2010 and 56% in 2011.

@blackjack: I think there are some that definitely over-think some of these things :-)

@Giuseppe Buzzetti: thank you for your comments.

@christina: yes, these are only for the companies that process and separate the rare earths.

@E. Lee Huston: Jiangyin Jiahua Advanced Material Resources Co. is a Neo Material Technologies company that received confirmed quota in the first batch.

@Ron: I think it’s early days to see if there will be consequences of such tariffs.

@robit: there has been no further clarification, to my knowledge, I’m afraid.

9 Nevada George May 18, 2012 at 5:05 pm

Gareth

Do you think that there is any manipulation/distortion in
the way the allocations were distributed?
For instance…were HRE allocations given to LRE producers
that have no use for the allocation.(they don’t have the quantity
of product to fill the allocation).??????????????????

10 henk mol May 21, 2012 at 1:53 am

Dear Gareth,
Is the demand for LREEs still affected by the March 2011 earthquake and tsunami in Japan? It is remarkably silent around battery making for hybrid cars, which are based on NiMH (LREE) chemistry. Fact is, it is hard to get a rare occasion of a failing hybrid drive battery in a Toyota fixed today as the battery is not available.

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