The Chinese Ministry of Industry and Information Technology released the rare earth production and refining quota for H2 2023

The Chinese Ministry of Industry and Information Technology released the H2 2023 rare earths mining and refining quota, which saw the mining quota volume maintained at 120kt REO and the smelting and refining quota also maintained at 115kt REO. While the mining quota volume remained unchanged, the distribution of the quota between hard-rock mining and ionic clay extraction was altered, with ionic clays forming 7% of the mining quota compared to 9% in the H1 2023 quota. This effectively reduces the volumes of heavy rare earth (HREE) feedstock being produced within China while increasing light rare earth (LREE) feedstock availability. 

The changing distribution of the mining quota is also observed in the distribution among the China state-owned enterprises.  China Northern Rare Earth Group (CNRE) which mines LREE hard-rock ores at the Baiyun Obo mine in Inner Mongolia was assigned the largest mine quota of 85.7kt REO, though received no ionic clay allocation. China Rare Earth Group (CREG) received a mining quota of 31.6kt REO, though this contains 5.5kt REO of ionic clay production, which when combined with newly consolidated Xiamen Tungsten and the Guangdong-based assets totals 8.2kt REO from ionic clays. The smelting and refining quota was also heavily weighted toward CNRE, which was assigned 68.5% of the total quota at 78.8kt REO, increasing from 73.8kt REO in the previous quota release.

Project Blue expect the quota will apply downward pressure on prices of LREEs, including Nd-Pr in the short term as the expectation of additional supply availability propagates through the industry, though seasonal purchasing behaviour should support prices towards the end of the year. For HREEs, the decrease in mining quotas hints strongly at China’s intention to limit ionic adsorption clay mining in the country and increasingly look to imported feedstocks from Myanmar and Laos.