The Second Round of Chinese Rare-Earth Export-Quota Allocations for 2013

by Gareth Hatch on July 6, 2013 · 7 comments

in China, News Analysis, Rare Earths

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Earlier this week, the Chinese Ministry of Commerce (MOFCOM) announced the second round of allocations of rare-earth export quotas for 2013, to companies operating in China. This follows the initial announcement outlining the first allocation for 2013 in December 2012.

A total of 15,500 t of export quotas was allocated in this second round, comprising 13,821 t of light rare-earth (LRE) products and 1,679 t of medium / heavy rare-earth (M / HRE) products, bringing the total for 2013 to 30,999 t. This is almost identical to the 2012 total of 30,996 t.

Let’s now take a look at the allocation numbers associated with this week’s announcement, before reviewing them in the context of the full year’s allocations, and those of recent years. The companies below, highlighted in green are Chinese / non-Chinese joint-venture (JV) companies – the rest are Chinese-owned. The list is sorted from highest-to-lowest total allocation:

Second set of allocations of rare-earth export quotas, issued to
individual companies for 2013. Source: Chinese Ministry of Commerce
Exporting Company Allocation (tonnes)
LRE M/HRE Total
Baotou Rhodia Rare Earth Co. 1,020 65 1,085
Gansu Rare Earth New Materials Co. 881 72 953
China Nonferrous Import-Export Co. Jiangsu Branch 758 137 895
Grirem Advanced Materials Co. 735 141 876
China Minmetals Corporation* 670 140 810
Yiyang Hongyuan Rare Earth Co. 712 21 733
Yixing Xinwei Leeshing Rare Earth Co. 611 114 725
Ganzhou Chenguang Rare Earth New Materials Co. 660 57 717
Leshan Shenghe Rare Earth Technology Co. 647 56 703
Zibo Jiahua Advanced Material Resources Co. 683 19 702
Guangdong Rising Nonferrous Metals Group Co. 572 79 651
Jiangyin Jiahua Advanced Material Resources Co. 529 118 647
Liyang Rhodia Rare Earth New Materials Co. 489 141 630
Xuzhou Jinshi Pengyuan Rare Earth Materials Co. 546 54 600
Ganzhou Qiandong Rare Earth Group Co. 455 94 549
Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co.** 509 28 537
Baotou Huamei Rare Earth Hi-Tech Co.** 508 29 537
Sinosteel Corporation 462 44 506
Inner Mongolia Baotou Hefa Rare Earth Co.** 444 27 471
Chalco Rare Earth (Jiangsu) Co. 373 96 469
Jiangxi Rare Earth & Rare Metals Tungsten Group Co. 438 6 444
Shandong Pengyu Industrial Co. 378 40 418
Baotou Tianjiao Seimi Rare Earth Polishing Powder Co.** 201 9 210
Huhhot Rongxin New Metal Smelting Co. 155 14 169
Baotou Santoku Battery Materials Co. 159 10 169
Ganxian Hongjin Rare Earth Co.* 132 31 163
Guangdong Zhujiang Rare Earth Co. 83 37 120
Xi’an Xijun New Materials Co. 11 0 11
Sub-Total: Chinese-Owned 9,974 1,189 11,163
Sub-Total: Chinese / Non-Chinese JVs 3,847 490 4,337
Total 13,821 1,679 15,500

* Part of China Minmetals Group, which was allocated a confirmed total of 973 t.
** Part of Baogang Group, which was allocated a confirmed total of 1,755 t.

Here is a comparison of the quota allocations for the past five years:

Export quotas for the Chinese rare-earth industry (tonnes)
Source: Chinese Ministry of Commerce
Year Period Chinese-owned Chinese /
Non-Chinese JV
Sub-Total TOTAL
2009 H1 15,043 6,685 21,728 50,145
H2 18,257 10,160 28,417
2010 H1 16,304 5,978 22,282 30,258
H2 6,208 1,768 7,976
2011 H1 10,762 3,746 14,508 30,246
H2 12,221 3,517 15,738
2012 H1 16,066 5,160 21,226 30,996
H2 6,340 3,430 9,770
2013 H1 11,136 4,363 15,499 30,999
H2 11,163 4,337 15,500

We can see that there has been little change in the total quantity of allocations in the past four years, even if the structure and methods of allocations have evolved. The same companies which were allocated first-round quotas in 2013 also received them in the second round.

Given the projected increases in non-Chinese supply of LREs in 2013 and beyond, it was expected in some quarters that MOFCOM might eliminate export quotas for LREs; while this has not yet happened, it is still a distinct possibility. MOFCOM was apparently at pains to preserve the total export quota numbers in comparison to 2012, perhaps in an attempt to minimize volatility caused by the allocations. Of course, doing so is a case of “too little, too late” given that the rare-earth price increases which peaked in mid-2011, were caused by the rare-earth supply chain mis-interpreting the drop in quotas in 2010 as an actual restriction on supplies from China…

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1 Christina Chen July 6, 2013 at 3:56 pm

Hi Gareth,

Thanks for the info as as always. I learned that last year the quotas in 2012 was only used 48.75% and 2011 was used 61.6%. I wonder what is the significance of the quotas. Sometimes, I almost wonder if the quotas actually have been encouraging people to buy more rare earth product…

I wonder how other people think about this.

Best regards,
Christina

2 Andriette Casantini July 6, 2013 at 7:48 pm

Looked Tmr better when there was conversation. Also liked the words of jack Lifton and Gareth. iChat more helpful than the measurements. Are u both too busy with innovations and consulting $$

Namaste
A

3 Amar Acharjee July 7, 2013 at 1:03 am

Dear Sir,

Thanks for the information with chart of the export quota from 2009 to 2013.

4 E. Lee Huston July 7, 2013 at 9:18 am

Hi Gareth,
Thanks for the MOFCOM update. Allocations set exports from China. How do the regs deal with companies like Molycorp’s Zipo and Jaingyin that import REOs for separation? Do the imports add to the allowed exports or is Molycorp reducing permitted Chinese production?
— Lee

5 Gareth Hatch July 7, 2013 at 9:30 am

@Christina Chen: these days the quotas are as much a way of exerting additional control on the individual producers as anything else. For me a key number to watch is the ratio of LRE to M/HRE quota, since they separated the two. The first three allocations (H1 & H2 2012 and H1 2013) are similar (14.2-14.4%) but for this latest announcement, it is closer to 12.1% – i.e. there was a reduction on available M/HREs. We’ll have to wait to see if this becomes a trend.

@Andriette Casantini: thanks for the feedback – we’re working on increasing the frequency of narrative / commentary pieces – watch this space :-)

@E. Lee Huston: to my knowledge the source of feedstocks has no bearing on the quotas. I wouldn’t look at it as Molycorp “reducing permitted Chinese production” – their two facilities have been producing for years and we have to remember that the majority of production in China is destined for China-based end users.

6 Gennady July 8, 2013 at 1:24 am

Hi Gareth,

Thank You. Valuable information.

7 Ruirui Chen July 8, 2013 at 2:36 am

As I know though there export quota,rare earth smuggling is more serious,they smuggled through Hong Kong ?Taiwan then overseas.The result about China WTO case on rare earths this year will come out, there may be some impact on the market.

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