china crackdown on rare earth producers

China crackdown on rare earth producers
Friday, September 28, 2012

China is going after small, inefficient rare earth producers in China.

This could further restrict supply from the world's biggest producer of the minerals and support weak prices.

On August 6, it proposed new rules saying mixed-production rare earth mines must have a yearly output of no less than 20,000 tonnes a year and smelters must produce at least 2,000 tonnes a year.

This could result in China reducing its mining of rare earths by a fifth.

This could see production in China drop over the next few years.

China produces more than 90 percent of rare earths, a group of 17 elements used in defence, electronics and renewable-energy industries.

The goal of the Chinese government maybe to keep price levels at a certain level in the medium term. In the short term, they might drop off a little bit more, but this should be the bottom analysts spoken to said today.

Prices have been falling since a speculative bubble burst last year, but they are still well above levels before China clapped down on exports about two years ago, squeezing supply and propping the rally.





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