China Reduces Rare Earth EL by 40% in 2010

Chinese government released the second export license (EL) of rare metals for 2010. The annual quota volume of rare earths is reduced by 40% for 2010 compared with 2009 including the quota for foreign capital companies. Meanwhile, the quota was increased for tungsten and antimony. The government is obviously strengthening regulation on rare earths outflow. Rare earths are used for permanent magnets, secondary batteries or additives.

The second EL of rare earths totaled 7,976 tonnes. Total volume of the first and second EL becomes 24,280 tonnes for 2010, reduced by 27% from 33,300 tonnes in 2009 and almost halved in recent 5 years. Including EL for foreign capital companies, the annual quota shrinks by 40% to approximately 30,000 tonnes in 2010 from approximately 50,000 tonnes in 2009.

Chinese government has expressed an intention to phase down EL of rare earths in order to secure domestic resources and meet strongly increasing domestic demand. However, the latest volume cut by 40% is unprecedented regulation range. Several Japanese concerns criticized the policy seems rather excessive. One rare metal trader of Japan analyzed the government’s policy would impact recovering rare earth market in 2010 though the affect was rather small in 2009 with low demand after Lehman Shock.

The government announced 32 companies acquired the second EL of rare earths, increasing from 22 companies for the first EL. The government started to release EL volume and EL acquiring companies’ names not only for domestic companies but foreign capital companies this time.

Rare earths export quota for foreign companies is reduced to 7,700 tonnes in 2010 from 17,000 tonnes in 2009. The second EL quota is approximately 1,700 tonnes for 10 foreign companies, decreasing from 6,000 tonnes of the first EL quota. Japanese rare metal trader suggested Chinese government showed an intention to halve rare earths export volume regardless of domestic or foreign companies.