Beijing often issues two batches a year, but 2023 marked an exception with a third one. If there are no subsequent batches released this year, the year-on-year increases would be smaller than the 21.4 per cent and 20.7 per cent seen last year.

And that would mean “that the growth rate of the domestic supply of rare earths would be narrowed down this year”, according to a research note published by Topsperity Securities on Wednesday.

Such a decision, “together with the boost of demand from the new-energy-vehicle and wind-turbine sectors, is expected to drive a rebound of rare earth prices”, the note said.

China’s supply of rare earths is critical to the global supply chain, and its dominant hold on the group of 17 metals critical to tech development has drawn mounting geopolitical concerns in an intensifying tech rivalry between China and the United States.

Also, the world’s second-largest economy is restrictive in its supply and export of rare earths – identified earlier this year by the Ministry of State Security as strategic mineral resources “directly related to national security”.

Most Chinese production is controlled by six state-owned companies, and authorities have banned the export of rare earth extraction and separation technologies, as well as technology to make rare earth magnets. Meanwhile, the US Department of Commerce has called for plans to cut America’s reliance on Chinese rare earths.

China accounted for 80 to 90 per cent of global rare earth production in the early 2010s, but that dominance waned to around 70 per cent by 2023 amid a global increase in the supply of rare earths, according to the US Geological Survey.

Prices of the critical materials have been falling, overall. Based on data from Argus Media, a commodity-price consultancy, rare earths prices are down roughly 20 per cent since the beginning of this year.

With growing global concerns regarding reliance on Chinese rare earths, more governments have been pumping resources to develop their own capacities in rare earth production, including Australia, which has increased investment in rare earth mining and also ordered China-linked investors to dispose of shares in an Australian mining company.

Meanwhile, Beijing has released a new set of regulations that look to take effect on October 1 and would establish a rare earth product traceability information system.

China’s January-July rare earth exports rose 7.5 per cent, year on year, to 34,032 tonnes, while the export value plunged 40.8 per cent to US$300.4 million, customs data showed.

Source: South China Morning Post