Surging Premium for China Rare Earth Export License

Premium increases for Chinese rare earth export license recently. The premium was zero in late 2011 but the premium increased since Chinese government issued the first license for 2012. The premium is apparently around US$ 100 per kilogram for heavier rare earth items including neodymium and dysprosium. The premium is around 5 times of premium for lither rare earth items including cerium.

Chinese government had issued the rare earth export license for total 17 items. However, the government issued separated licenses for resource rich lither rare earth and resource limited heavier rare earth for 2012.

The first license volume was 10,546 tonnes for total rare earth for major 9 companies including China Minmetals Corporation for 2012. The volume includes only 1,451 tonnes for heavier rare earth. Other companies without the license pay premium to the license holders to export rare earth.

The premium was almost zero in late 2011 due to slower worldwide economy. The rare earth demand is still slow but the renewed license indicates severer export control by Chinese government. The message encourages speculative demand to push up the premium. The premium apparently increases to around US$ 20 per kg for lighter rare earth.