Earlier today the Chinese Ministry of Commerce (MOFCOM) announced the first round of allocations of rare-earth export quotas for 2014, to companies operating in China.
A total of 15,110 t of export quotas was allocated in this first round, comprising 13,314 t of light rare-earth (LRE) products and 1,796 t of medium / heavy rare-earth (M / HRE) products. Initial mainstream media reports appear to have missed MOFCOM’s indication that the first-round allocation represents 70% of the annual quota for 2014. If this is the case, then the estimated quota for 2014 will be 21,586 t, approximately 70% of the 2013 quota allocation of 30,999 t.
Update (12/14/13): Further clarification of the MOFCOM announcement indicates that the first-round quota allocations for antimony, indium, molybdenum, silver, tin and tungsten will be 70% of their respective annual quotas for 2014, but that this will NOT be the case for rare earths.
One company that usually receives export-quota allocations, Inner Mongolia Baotou Hefa Rare Earth Co., will not be given a specific allocation, according to MOFCOM, until it has rectified environmental issues at its facilities.
Let’s now take a look at the allocation numbers associated with today’s announcement, before reviewing them in the context of the recent allocations. 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:
| Exporting Company | Allocation (tonnes) | ||
| LRE | M/HRE | Total | |
| Baotou Rhodia Rare Earth Co. | 1,099 | 97 | 1,196 |
| Grirem Advanced Materials Co. | 974 | 197 | 1,171 |
| China Nonferrous Import-Export Co. Jiangsu Branch | 972 | 165 | 1,137 |
| Gansu Rare Earth New Materials Co. | 1,028 | 61 | 1,089 |
| Yixing Xinwei Leeshing Rare Earth Co. | 696 | 136 | 832 |
| Leshan Shenghe Rare Earth Technology Co. | 722 | 42 | 764 |
| Yiyang Hongyuan Rare Earth Co. | 729 | 25 | 754 |
| China Minmetals Corporation* | 621 | 122 | 743 |
| Ganzhou Chenguang Rare Earth New Materials Co. | 638 | 62 | 700 |
| Liyang Rhodia Rare Earth New Materials Co. | 504 | 186 | 690 |
| Xuzhou Jinshi Pengyuan Rare Earth Materials Co. | 606 | 64 | 670 |
| Ganzhou Qiandong Rare Earth Group Co. | 543 | 114 | 657 |
| Guangdong Rising Nonferrous Metals Group Co. | 547 | 80 | 627 |
| Jiangyin Jiahua Advanced Material Resources Co.** | 475 | 142 | 617 |
| Zibo Jiahua Advanced Material Resources Co.** | 540 | 11 | 551 |
| Jiangxi Rare Earth & Rare Metals Tungsten Group Co. | 506 | 3 | 509 |
| Sinosteel Corporation | 407 | 36 | 443 |
| Baotou Huamei Rare Earth Hi-Tech Co.*** | 356 | 17 | 373 |
| Chalco Rare Earth (Jiangsu) Co. | 236 | 92 | 328 |
| Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co.*** | 314 | 8 | 322 |
| Shandong Pengyu Industrial Co. | 260 | 30 | 290 |
| Baotou Tianjiao Seimi Rare Earth Polishing Powder Co.*** | 172 | 8 | 180 |
| Huhhot Rongxin New Metal Smelting Co. | 135 | 10 | 145 |
| Baotou Santoku Battery Materials Co. | 136 | 7 | 143 |
| Guangdong Zhujiang Rare Earth Co. | 65 | 40 | 105 |
| Ganxian Hongjin Rare Earth Co.* | 28 | 41 | 69 |
| Xi’an Xijun New Materials Co. | 5 | 0 | 5 |
| Sub-Total: Chinese-Owned | 9,557 | 1,199 | 10,756 |
| Sub-Total: Chinese / Non-Chinese JVs | 3,757 | 597 | 4,354 |
| Total | 13,314 | 1,796 | 15,110 |
* Part of China Minmetals Group, which was allocated a total of 812 t.
** Part of Molycorp, which was allocated a total of 1,168 t.
*** Part of Baogang Group, which was allocated a total of 875 t (significantly lower than in previous allocations because Inner Mongolia Baotou Hefa Rare Earth Co. was not assigned quota at this time).
Here is a comparison of the quota allocations for the past six years:
| 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 | ||
| 2014 | H1 | 10,756 | 4,354 | 15,110 | TBD |
| H2 | TBD | TBD | TBD |
If the second allocations in 2014 are similar in terms of LRE : M/HRE proportions to the first, then 11.9% of the total would be allocated to M/HRE products in 2014. This compares to 11.7% for 2013 and 12.5% for 2012, the first year that the quotas were split in this way.
There seems to be no reflection in the quota numbers, of the recent World Trade Organization ruling against China, with respect to rare-earth exports. It remains to be seen if the second allocations are in any way affected.
Update (12/13/13): by request I have added notes above to indicate which two facilities are owned by Molycorp.
Thanks Garrett for getting this info out so quickly. Does it not seem that the quota list is not final due to Inner Mongolia Baotou Hefa Rare Earth Co.’s quotas being delayed? There should be 200-300 tons added for them in early 2014. Also, there may well be more influence on H2 quotas after WTO situation is finalized which could force things open. Like you said, no reason for companies to panic.
@Simon Dalton: we’ll have to see how things play out for Inner Mongolia Baotou Hefa Rare Earth Co.’s quota allocation. You might recall that there is a precedent for quota allocation revisions, specifically for the first allocations of 2012, when they were contingent on the implementation of pollution-control measures.
Where do the various Molycorp “Canada” (ha ha, i.e., Neo Materials) operations fit into this? Are they reflected somewhere in the allocation table?
Thanks.
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V-Bob,
Molycorp’s China operations are: Jiangyin Jiahua Advanced Material Resources Co. & Zibo Jiahua Advanced Material Resources Co.
@Veritas Bob: I have now added notes to indicate the two Molycorp companies (thanks @Michael O’Donnell for responding earlier).
My thanks too Gareth, a nice tight and timely summary. It is also possible that the 70% is not correct, and if so it is hard to determine if the real figure will be higher or lower, whether the Chinese keep more or sell more. In the distant past they have sold more to keep downward pressure on prices, to remove competition, then changed in an attempt to bring prices up, which did not work, so it is anyone’s guess, and I agree with Simon Dalton that there may be missing data yet.
Happy festive season TechMetals, Allan..
@Allen: as you know, the export quotas do not reflect the reality of actual rare-earth exports from China, given the quantities that are exported outside of official channels.
Sticking with the quotas though for a moment, if Inner Mongolia Baotou Hefa Rare Earth Co. is allocated a quota as part of the first round, and if it was similar to last year (455 t) then the total first allocation would be 15,565 t.
If 15,565 t represents 70% of the total quota for 2014, then we could expect 22,236 t for next year. That represents less than 72% of the 2013 number. Either way, the numbers for 2014 are likely to be significantly lower than 2013.Related news? Maybe, considering recent B-52 flyovers.
http://kuow.org/post/china-imposes-first-ever-west-coast-shellfish-ban
OK – a further update: I have received further clarification on the MOFCOM announcement – apparently it indicates that first-round quota allocations for antimony, indium, molybdenum, silver, tin and tungsten will be 70% of their respective annual quotas for 2014, but that this will NOT be the case for rare earths. So – it will remain to be seen what the total will be in 2014, compared to 2013.
Gareth,
I’m neither on the technical side nor a large player, but would like to know… does this lowering of export quotas mean that the unfilled demand will be drawn from miners/producers from the rest of the world (where the companies in which I do hold interests are)?
Kind regards.
Gareth,
Solid information on the rare earths is appreciated. Thank you.
It would be enlightening to have two more pieces of the puzzle:
1) Actual exports of rare earths from China which generally have been below quotas (of course, some off-the-books)
2) clarification on the supply chain for sources of rare earths coming from outside of China
The second issue is terribly important in that some materials are used as oxides and therefore may be used directly from e.g., Molycorp or Lynas, while metals and alloys require additional processing which is as yet dominated by China and that once rare earth oxides enter China that they become part of the quota system!?
Cheers, Steve
@ozziegeorge: it’s important to note that the actual amount of REEs shipped last year (through official channels at least), was much lower than the export quota of 31,000 t. It’s likely to be the same situation this year.
@SteveC: yes, the elusive piece of the puzzle is the “off-the-books” shipment number, for sure. I also agree that the “forgotten issue” is what happens to rare-earth oxides produced outside of China, that generally need to be in metallic or alloy form before they can be used (e.g. for magnets). Since there is very little capacity for such transformations outside of China, some portion of it would have to go to China. However, once transformed into a semi-finished or finished alloy or compound (e.g. NdFeB) then it would not be subject to export quotas ( though there would still be duties payable when exported).
Gareth,
Bloomberg is reporting Q1 RE exports at 13.46kt + Metals 7.17kt, apparently taken from the General Administration of Customs website: http://www.bloomberg.com/news/2014-04-21/china-s-march-rare-earth-exports-table-.html?cmpid=yhoo
Am I missing something here or would that not put exports up against H1 quotas right about now?
Lynas’s March 14 presentation estimated 12ktpa exports for the La product group alone but even so the bloomberg numbers would appear extraordinary.
Appreciate your thoughts.
@Tim: I note that the reported 13.46 kt includes “products” made from REEs. This may well include Nd-Fe-B magnetic powders and alloys and other REE-containing compounds. These latter materials are subject to export tariffs but are not subject to export quotas, and so would not “count” towards the H1 quotas that you mentioned.
Thnx Gareth, Hongpo has now provided a much clearer summary than the Bloomberg presentation, although I’m presuming “Ore” should read “Oxides”.
Would be interesting to get a summary of “processed Products” nonetheless.
Some very interesting take outs there, US predominance & La demand for one. Appears at least the ROW catalyst business has a pulse, no doubt the WTO will turn up for a photo op.
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