All of the increase in mining allocation was allotted to light rare earth (LREE) mining and nearly exclusively to China Northern Rare Earths Group (CNRE), while China Rare Earths Group (CREG) saw a relatively insignificant increase for its LREE allocation. Following the announcement, the rare earth industry in Inner Mongolia held its industry forum in Baotou where industry participants (led by CNRE) discuss the developments and strategies.

There is no shortage of mine projects globally and to date, China has been the most active in securing additional international mine supply, including the US Mountain Pass mine, which restarted during the US-China trade war ping pong. This is despite China hosting the largest reserves of rare earths. Production in China steadily decreased over the 2010s, as the country consolidated supply into now four state-owned enterprises (CNRE and CREG being the largest two). During this period supply of neodymium was shoved into the spotlight, as demand from magnets used in electric vehicle motors tightened the market. Since 2017, most rare earth projects have realigned their projects to focus on magnet materials, although not all have dropped using basket price values for the full suite of rare earth elements to justify the economics of extraction.

China has started to increase its light rare earth mining again since 2020 and the recent quota announcement brings China’s production potential to record levels and the country’s market share potential back to around 75% of the global mine supply, after falling below 70% in 2020 and 2021. According to Project Blue, the level of the quota removes any near-term requirement for additional LREE supply, though China’s approach to building magnet capacity ahead of demand may continue to support imported rare earth concentrates to add to its output above quotas.

This news may see advanced projects look towards the evolving geopolitical landscape outside of China, which is thriving with attention from governments to invest in independent supply chains. Some projects will also look to turn towards heavy rare earths (HREE) in the short term, where prices are soaring and 50% of supply has shifted to Myanmar as mines in China have closed since 2016. But, with China’s geologists actively exploring ionic clay deposits in its southern provinces, will we see domestic supply security return to China before key HREEs restricts growth in demand? Either way, China has once again reminded the world that it holds all the cards for the time being when it comes to rare earths.

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