The Chinese rare earth industry is undergoing a historic transformation. On August 22nd, the Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Natural Resources jointly issued the "Interim Measures for the Total Control and Management of Rare Earth Mining and Rare Earth Refining Separation" (Order No. 71 of the Ministry of Industry and Information Technology, abbreviated as "Interim Measures"). The implementation of these measures marks a new stage in the country's management of this strategic resource.
Compared with the "Interim Measures for the Total Control and Management of Rare Earth Mining and Rare Earth Refining Separation (Draft for Public Comment)" (abbreviated as "Draft for Public Comment") released by the Ministry of Industry and Information Technology in February, the "Interim Measures" simplify the management process, strengthen local supervision, clarify penalty standards, and reduce the intermediate management role of rare earth groups, directly strengthening control over rare earth enterprises. The core changes reflect the direction of precise supervision.
Industry insiders told Caixin that the "Interim Measures" may trigger market expectations for supply-side tightening.
Caixin noticed that the "Interim Measures" clearly define the annual total control indicators for rare earth mining and rare earth refining separation as "total control indicators", no longer using the previous "rare earth indicators" in the "Draft for Public Comment".
Compared with the "Draft for Public Comment", the core changes in the "Interim Measures" are concentrated in Article 6 and Article 7. Article 6 clearly stipulates that the total control indicators will be directly issued to each rare earth production enterprise, meaning that the government's control will be more strict and detailed; Article 7 clearly stipulates that the rare earth production enterprises will be determined by the Ministry of Industry and Information Technology in conjunction with the Ministry of Natural Resources, which is expected to accelerate the elimination of backward production capacity in the industry, and production lines with poor environmental protection or low yield will be eliminated in the future.
From the perspective of the management mechanism, the "Draft for Public Comment" clearly stipulates that the three parties of the Ministry of Industry and Information Technology, the Ministry of Natural Resources, and the National Development and Reform Commission will jointly manage (Article 3); the "Interim Measures" change to the Ministry of Industry and Information Technology in conjunction with the Ministry of Natural Resources and the National Development and Reform Commission (Article 4), strengthening the leading role of the Ministry of Industry and Information Technology.
In terms of enterprise entities, the "Draft for Public Comment" limits rare earth mining enterprises and rare earth refining separation enterprises to "large rare earth enterprise groups and their affiliated enterprises promoted by the state" (Article 4), while the "Interim Measures" simplifies it to "rare earth production enterprises are determined by the Ministry of Industry and Information Technology in conjunction with the Ministry of Natural Resources" (Article 7), no longer mandating the "large group" form.
Regarding the determination and issuance of total control indicators, the "Draft for Public Comment" only mentioned resource reserves and market demand (Article 7), while the "Interim Measures" clearly stipulate that the indicators should be considered "national economic development goals" (Article 5); the "Draft for Public Comment" requires the rare earth group to decompose the indicators and file them (Article 9), while the "Interim Measures" directly issue the indicators to enterprises by the ministries and commissions and notify local governments (Article 6), eliminating the intermediate decomposition stage of the rare earth group.
Regarding the implementation of total control indicators, the "Draft for Public Comment" proposed retroactive management requirements, but the "Interim Measures" clearly stipulate that enterprises must report the flow of rare earth products to the traceability system by the 10th of each month and add the requirement for enterprises to fulfill obligations for network and data security protection (Article 12). Regarding the supervision of total control indicators, the "Interim Measures" require local departments to "strictly implement the regulations on administrative inspections for enterprises", add the principles of "precision and efficiency", and emphasize the supervisory duties and power to investigate and punish illegal acts of the county-level and above local authorities (Article 12).
Additionally, the "Draft for Public Comment" proposed that "if rare earth mining enterprises and rare earth refining separation enterprises under the rare earth group have illegal and irregular production behaviors exceeding the indicators, the total control indicators for the next year will be reduced" (Article 16); the "Interim Measures" expand this to "if rare earth production enterprises violate this measure and are subject to administrative penalties, the total control indicators for the next year will be reduced" (Article 14).
On August 20th, Western Securities released a research report stating that as of August 19th, the price of praseodymium and neodymium oxides in China was 625,000 yuan per ton, with an increase of 55.28% compared to the beginning of the year. In April this year, China implemented export control on seven types of medium-heavy rare earth items, covering oxides at the upstream stage to magnetic materials at the downstream stage (such as neodymium iron boron containing dysprosium and terbium), strengthening policy control and enhancing supply rigidity. The value of strategic rare earth metals is expected to be re-evaluated.
(SMM)