UPDATE: China Ministry: Rare Earth Mining Capped At 93,800 Tons This Year
(Adds details of 2010, 2011 quota allocations, suspension of new mining license issuance, export limit)
BEIJING (Dow Jones)--China's Ministry of Land & Resources said Thursday that it will cap output of rare earth oxides at 93,800 metric tons this year, up from 89,200 tons last year.
Global prices of rare earths soared last year after the government set export quotas on rare earths, a group of 17 chemically similar elements used in a variety of high technology applications.
Officials in China--which contributes about 90% of global rare earth supply but has a much lower percentage of global reserves--have said the reduction in export quotas was necessary to protect its natural resources, reduce pollution and save energy.
The land and resources ministry Thursday also extended an in-principle suspension of new exploration and mining rights for rare earths, tungsten and antimony to end-June 2012. It originally set the deadline at June 30, 2011.
The government hasn't issued new rare earth mining rights for years, citing concerns about damage to the environment.
For 2011, up to 80,400 tons of light rare earths can be mined, while the limit for more valuable heavy rare earth minerals is 13,400 tons, the ministry said in a statement on its website. The limits on mine output last year were set at 77,000 tons of light rare earths and 12,200 tons of heavy rare earths. Light rare earth elements are distinguished from heavy ones by lower atomic weights.
Earlier, export quotas for the first half of this year were capped at 14,508 metric tons, down about 35% compared with the same period last year, according to data from the Ministry of Commerce.
Almost all of the country's light rare earth reserves are in the northern Inner Mongolia Autonomous Region, which has a quota of 50,000 tons this year, and the southwestern Sichuan province, whose quota is 24,400 tons.
Heavy rare earths are found in Jiangxi, Guangdong, Fujian and Yunnan provinces, which have been granted quotas of 9,000, 2,000, 2,200 and 200 tons, respectively.
The suspension of issuance of new mining rights may restrain for now the rare-earth mining ambitions of large state-owned companies such as Aluminum Corp. of China Ltd. (ACH) and China Nonferrous Metal Mining (Group) Co. The companies had hoped to obtain licenses this year.
Market participants have speculated that the establishment of 11 state-planned rare earth mining zones in Ganzhou Prefecture in the eastern province of Jiangxi--an area rich in ion-absorbed types of rare earth minerals--could indicate that issuance of mining rights would resume.
Zhou Zhongshu, the president of China's largest diversified metal trading company, China Minmetals Corp., has urged Beijing to resume issuing mining and extraction rights in the rare earth mining zones. He said he is confident the company will win some of the rights if issuance is resumed.
-Yajun Zhang contributed to this article, Dow Jones Newswires; (86 10) 8400-7712; yajun.zhang@dowjones.com
-- Yue Li in Shanghai contributed to this article.