Bloomberg News

China Issues Additional Rare-Earth Quota, Keeps Baotou Unit Out

May 17, 2012

China, the world’s biggest supplier of rare earths, issued additional export quotas to companies that passed the government environment assessment, leaving out a unit of the nation’s top producer of the metallic elements.

While some units of Baotou Iron & Steel Group, Aluminum Corp. (2600) of China and other companies received quotas, Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111), one of the units of Baotou Steel, remained excluded, according to a statement on the trade ministry’s website. Companies that fail to meet environment-protection standards by July 31 will not be allowed to export this year, the ministry said.

“It’s a surprise that Inner Mongolia Baotou still can’t get an export permit,” Wei Chishan, a Shanghai-based analyst at SMM Information & Technology Co., a data provider. “The government is very serious about the environment issue as everyone is looking at the company. So far we haven’t seen a significant recovery in demand for rare earths.”

Rare earths are 17 chemically similar elements used in products including Boeing Co (BA:US)’s helicopter blades and Toyota Motor Corp. (7203)’s hybrid cars. China, which has more than 90 percent of the global rare-earth market, will keep quotas little changed this year, the ministry said Dec. 27, after exporters used only half the quantity permitted for last year because of weakening demand.

Inner Mongolia Baotou Steel Rare-Earth added 0.8 percent to close at 44.11 yuan today in Shanghai, trailing a 1.4 percent gain in the benchmark Shanghai Composite Index. Three calls by Bloomberg News to the company’s board secretary office seeking comment went unanswered.

First Round

China allocated 10,546 tons of first-round export quotas to nine companies, including China Minmetals Corp. and Sinosteel Corp., on Dec. 27, saying another 14,358 tons would be issued to complete the first-round quotas pending environmental approval and the total would account for about 80 percent of the volume for 2012. Today, it issued an additional 10,680 tons as part of the first-round quota.

Guangdong Zhujiang Rare Earths Co. and Huhhot Rongxin New Metal Smelting Co. are among those awaiting environmental approval, according to the ministry. China’s export quota this year may be about 31,130 metric tons, according to Bloomberg News calculations based on first-round figures given Dec. 27. The quota was 30,184 tons in 2011 and 30,258 tons in 2010.

The export prices from China for eight rare earths found at the Mount Weld project in Western Australia fell to $92.2 a kilogram on average in the first quarter, compared with $147.96 in 2011, according to figures on Lynas Corp. (LYC)’s website. The price fell to $63.06 on May 14, the company said.

China has curbed output and exports since 2009, when quotas were set at 50,145 tons, to conserve resources and protect the environment. Japan, the world’s biggest importer of rare earths, the U.S. and European Union filed a complaint to the World Trade Organization against China’s limits on the exports.

To contact Bloomberg News staff for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

To contact the editor responsible for this story: Rebecca Keenan at rkeenan5@bloomberg.net


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