- Reducing the total amount of REEs it exports in H210;
- Announcing REE prices would be set and published monthly by the central government through a unified pricing structure covering main provinces responsible for REE production;
- Planning to eventually consolidate disparate REE producers into 3–5 large conglomerates;
- Creating a resource tax to funnel funds from the richer to the poorer provinces.
"The export quotas for 2010 have been reduced by 40% compared with 2009," said Dudley Kingsnorth, of Industrial Minerals Co. of Australia Pty. Ltd. "This is a far greater reduction than forecast—along with others, I had forecast the reductions would be of the order of 6%–7% in the coming years."
The impact of the change will have far-reaching consequences, particularly outside of China. "Chinese REE export quotas for 2010 are now significantly less than rest of the world (ROW) consumption," said Kingsnorth, adding, "the quotas for 2010 total 30,250t REO compared with ROW forecast demand of 50,000–55,000t. Total ROW production capacity is currently 10,000–12,000t at best, which indicates a shortfall this year 10,000–15,000t at least."
Kingsnorth believes the reduction in export quotas has caused two crossover points. "First, the quotas are less than ROW demand this year, which I did not believe would occur until 2011—and to a lesser extent," he said. "Second, if this trend continues, ROW supply will not be able to meet the shortfall for several years. In the near future, the shortfall will be met by a drawdown of stocks."
There is also one other consequence of significance. "I also believe that the resultant high prices will make elimination of illegal mining in China more difficult," Kingsnorth said.