China Tightens Rare Earth Rules


"China to impose quotas on ferroalloys with more than 10% REEs Friday."

The Wall Street Journal, Yajun Zhang

China moved to tighten its control over rare earth metals Thursday by expanding its export quota system and imposing higher taxes on the metals, which are used in such high-tech applications as laser-guided weapons and hybrid car batteries.

The country also said it will get tough with companies that resell export quotas and won't approve any new projects—or the expansion of existing ones—in rare earth separation over the next five years.

ferroalloys with REEsThe measures were announced separately by the State Council (cabinet) and the Commerce Ministry in an apparently coordinated offensive in a sector that has become highly politicized. Quotas for H111 total 14,508 metric tons—down about 35% from the same period last year, according to the Commerce Ministry. These measures have boosted rare earth prices and made export quotas much more valuable.

In the latest move, Beijing said it is raising the tax on light rare earth ores to ¥$60 (US$9.22) per ton as of April 1, while lifting the tax on heavy ores to ¥$30/ton.

"[China will] greatly increase rare earth taxes and refine its pricing mechanism to reduce the excessive profits in the rare earth mining industry," the State Council said.

China will also raise the threshold for companies applying for export quotas, though it didn't say whether this would reduce the number of qualified exporters. China granted quotas to 22 Chinese companies and 10 foreign companies this year.

The Commerce Ministry said it would start imposing export quotas on ferroalloys containing more than 10% rare earth minerals by weight, effective Friday.

This year, China began imposing 25% tariffs on exports of alloys with more than 10% rare earth content.

Prior to the latest announcements, China had issued export quotas for rare earth primary products, including minerals and oxides, but its quotas didn't include alloys.

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe