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https://news.metal.com/newscontent/103188017/new-regulations-on-rare-earth-mining-set-to-be-introduced-spot-market-confidence-surges-rare-earth-permanent-magnets-concept-strengthens-smm-commentary

New Regulations on Rare Earth Mining & Market Impact

Regulatory Developments

• The Ministry of Industry and Information Technology (MIIT) released a draft for public comment on rare earth mining and smelting separation regulations on February 19, 2025.
• The regulations aim to:
  • Implement total volume control for rare earth mining.
  • Restrict mining and smelting activities to approved enterprises only.
  • Introduce a traceability system for rare earth products to curb illegal production and trade.
• The public consultation stage is ongoing, and final regulations may undergo adjustments.

Market Reaction & Price Movements

• Following the announcement, the rare earth spot market surged on February 20.
• Rare earth permanent magnet stocks saw strong gains:
  • Chuangxing Resources hit the daily limit.
  • Zhenghai Magnetic Material (+6.1%), Guangsheng Nonferrous Metals (+5.59%).
  • Other gainers: Hanghua Co., Yujing Co., China Rare Earth, Baogang Group, Ningbo Yunsheng.
• Rare earth oxide prices rose sharply:
  • Pr-Nd oxide reached 444,500 yuan/mt, up 2.42% from the previous day.
• However, downstream demand remained limited, causing minor price corrections midday.

Industry Implications

• Tighter supply control: Regulations will restrict mining quotas, preventing over-mining and illegal activities.
• Encourages industry upgrades: Companies must shift focus to technological innovation and efficient resource utilization.
• Enhances transparency: The new traceability system will regulate supply chains and prevent market manipulation.

Institutional Opinions

• CITIC Securities:
  • Predicts further concentration of rare earth resources among major groups.
  • Expects supply-side constraints to strengthen.
  • Highlights high-performance NdFeB magnets as key for humanoid robots and other tech advancements.
• Guojin Securities:
  • Believes this marks the beginning of rare earth supply-side reform.
  • Expects further industry consolidation and strategic value growth amid geopolitical tensions.
  • Recommends watching China Rare Earth, China Northern Rare Earth, JL MAG Rare-Earth, Zhongke Sanhuan.
• Guotai Junan:
  • Notes potential supply risks from Myanmar due to political instability.
  • Sees China's equipment upgrade and consumer goods trade-in policy boosting long-term demand.

Future Outlook

• The market is awaiting final mining quotas and terminal demand details.
• Rare earth prices expected to stabilize or grow under supply-side reforms.
• Further policy developments could impact stock movements and investment opportunities in the sector.