China Ramps Up Rare Earth Metal Production
Rare Earths Are Essential To EV Manufacturing
The Chinese Ministry of Industry and Information Technology and the Ministry of Natural Resources have adjusted the rare earth metal production quota for 2023, raising the volume to 240,000 tonnes, as reported by Nikkei Asia on September 25.
Rare earth materials, including germanium, gallium, dysprosium, and others, are crucial components used in the production of high-tech products, weapons, and most importantly, EV motors.
With China aiming to boost domestic sales and expand its presence in foreign markets, the need for rare earth supplies has become even more significant.
The move to increase production comes amidst concerns raised by industries regarding the restrictions on germanium and gallium material exports, which are set to take effect from August 1, 2023. While it remains uncertain if these controls will extend to other rare earth materials, China's customs data already shows an increase in rare earth exports. In the first eight months of 2023, China exported 8.6% more rare earth than the same period in the previous year, with August alone witnessing a 30% year-over-year growth. This surge in exports has led to speculations of potential hoarding.
China's dominance in the global rare earth market is evident, with the country accounting for 70% of global production in 2022, according to the United States Geological Survey (USGS). Given the strict control over production by the Chinese government, any changes in rare earth policies will have a significant impact on the global market. There are concerns that China may reduce production volumes or even ban exports altogether.
However, despite the increase in overall production quotas, China has not raised the quotas for elements like dysprosium, which is vital for EV motor magnets. The quotas for medium and heavy rare earths, essential for high-tech products and weapons, also remain under 20,000 tonnes. This indicates that while China is increasing production, it is still exercising control over the distribution of specific rare earth materials.
The rise in rare earth production quotas marks a continuation of the growth trend observed since 2018. It demonstrates China's commitment to meet the increasing demand for these critical materials, especially in the rapidly expanding EV industry.
As China strives to solidify its position as a global leader in EV production, ensuring a stable supply of rare earth materials is essential. The increase in production quotas will not only facilitate the country's ambitious domestic and international EV plans but also have a significant impact on the global rare earth market.
With China's rare earth policies closely watched by industries worldwide, any changes in production and export controls will undoubtedly shape the future of this essential industry