First announcement of the ordinance and related quotas higher than expected
[투데이에너지 조대인 기자] While allowing China to obtain permission for the rare earth mining and smelting separation business,
If the amount is exceeded, the rare earth products and income obtained through illegality will be confiscated. .
According to an insight into the world energy market released by the Korea Energy Economics Institute, the Ministry of Industry and Information Technology of China announced that the’rare earth ordinance bill’, the first rare earth bill in China, was announced, and that it had entered the process of collecting opinions by February 15th. .
Rare earth refers to 17 kinds of rare elements such as lanthanum, scandium, yttrium, and cerium, and is managed as a strategic material as it is used in fields such as smartphones, nuclear reactors, solar panels, military weapons, optical fibers, semiconductors, and electric vehicle batteries.
China’s Rare Earth Ordinance’ consists of a total of 29 paragraphs to strengthen the management of rare earths by legislating the quota management for rare earth mining and smelting separation, and illegal penalties.
The State Council stated that it would establish a rare earth management cooperation mechanism to study and determine rare earth management policies and establish a rare earth product history information system.
It also stipulated that rare earth mining and smelting separation and restrictions can be taken to protect rare earth resources and the environment, and that foreign trade and export regulations should be observed when exporting rare earths.
The Ministry of Industry and Information Technology of China confirmed the rare earth mining and smelting quota for the first half of 2021 to 84,000 tons and the smelting separation quota to 81,000 tons in the first half of 2021.
China manages rare earths as a national power resource and announces quotas for mining and smelting rare earths twice a year.
Since China has set a quota for the first half of the year at 50% of the previous year’s annual quota, the quota for rare earth mining in the first half of 2021 is expected to be 70,000 tons or to be reduced further due to the influence of the’Ordinance’.
Last year, the annual quota was 140,000 tons for rare earth mining and 135,000 tons for smelting and separation.
However, the released figures increased by 14,000 tons rather than originally expected, which were 27.3% and 27.5% higher than the first half of 2020, respectively.
Industry insiders analyzed that the reason China raised the quota for the first half of 2021 was due to a sharp increase in market demand in the sectors of semiconductors, new energy vehicles, and wind power.
The sector where rare earths are most used is magnetic materials, which account for 48% of global demand, and are mainly used for wind power and new energy vehicles.
In 2020, the scale of new wind power facilities in China increased by 176% from the previous year, and in the same year, the production of new energy vehicles was 235,000 units and sales volume reached a record high of 248,000 units.
In 2020, China’s rare earth exports declined compared to the previous year, while imports increased, showing a weakening of its influence in the global market.
The export volume of rare earth products in 2020 recorded 35,4 million tons, a decrease of 23.5% from the previous year, the lowest since five years.
China’s major export destinations are the United States, Japan, and the Netherlands, accounting for 70% of all China’s exports.
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The Chinese Rare Earth Society pointed out the decline in demand due to Corona 19 and the transfer of orders to other countries, such as Australia, as reasons for the decline in exports.
The US signed a contract with Lynas, Australia’s largest rare-earth supplier, to build a rare-earth processing plant in Texas, USA last year to reduce its dependence on Chinese rare-earths.
In October of last year, former US President Trump issued an executive order to increase production of rare earths in his country, and President Biden also issued an executive order to check the degree of dependence on foreign countries such as semiconductors and rare earths.
Australia also approved Arafura Resources’ 25-year Nolans project to increase production of rare earths, and China’s rare earth exports are expected to decline further.
In 2020, the import volume of rare earth metals recorded 7,148 tons, an increase of about 178% from the previous year.
The main import destinations are Myanmar, Malaysia and the United States, of which Myanmar accounts for 76.14%.
The Chinese Rare Earth Society said that although China’s imports of rare earth metals are increasing, the current situation in Myanmar, the largest import destination, is unstable, so it is necessary to diversify import destinations.
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