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  • China ends “export quota” system and counters with a “strict export license” to limit the world's supply of rare earths, tungsten and molybdenum.

China ends “export quota” system and counters with a “strict export license” to limit the world’s supply of rare earths, tungsten and molybdenum

Posted on January 4, 2015 by Hongpo Shen

On December 31, 2014 China’s Ministry of Commerce (MOFCOM) and the General Administration of Customs (GAC) jointly issued the following two announcements, effective January 1, 2015: “Catalogue of Commodities subject to Export License Administration in 2015 (Announcement [2014] No.94)” and “License-Issuing Catalogue in Grades of Export License Administration in 2015 (Announcement [2014] No.97)”. These announcements articulate how China has officially cancelled their policy on export quotas for rare earths, tungsten and molybdenum after losing their World Trade Organization appeal in August 2014.

“48 varieties of goods subject to the administration of export license in 2015 shall be subject to the administration of export quota license, export quota bidding and export license, respectively.

Goods subject to the administration of export license shall include: rare earths, tungsten and molybdenum; Enterprises that export rare earths, tungsten and molybdenum, should apply for an export license on the strength of the export contracts of the enterprises, no need the approval documents of the Ministry of Commerce;” the MOFCOM said in its announcements.

Despite China ending their quota policy on the exports of rare earths, tungsten and molybdenum for the New Year, the government has begun to implement the export licensing system as a tool to limit export of these rare metals.

“To export rare earths, enterprises shall apply to the designated issuing agency for export licenses and make export declaration at the specified port, which aims to maintain the normal order of operation,” MOFCOM stressed.

According to the announcement, a total of 75 export licenses relate to rare earth ore, metals and compounds listed in the 2015 Catalogue and are now subject to export control by means of licenses, which including 39 kinds of medium-and-heavy rare earths and 36 kinds of light rare earth mixtures. Meanwhile, the ministry has specified 8 declaration ports to allow the enterprises to export rare earths, which includes the following: Tianjin Customs, Shanghai Customs, Qingdao Customs, Huangpu Customs, Huhehaote Customs, Nanchang Customs, Ningbo Customs, Nanjing Customs and Xiamen Customs.

The cancellation of rare earth export quotas in 2015 by the Chinese government is expected to have a limited impact on the global rare earth market. The rare earth export quota system has become less important as it will be offset by the strictly export licensing system and the country’s production quota system at home.

China actual exported 24,826 tons of rare earth ore, metals and compounds in the first 11 months of 2014. Exports volume rose 24.75% year-on-year, but the exports value declined 33.2% to US$341.1 million compared to the same period in 2013, according to the latest data released by the China Customs Statistics Information Center.

The Chinese government will continue to adjust its rare earths policy to further tighten its supply of rare earth metals. The intent is to focus on their domestic market in 2015 due to the WTO ruling and to deal with demand.

“The rare earth permanent magnet industry in 2015 is ushering in a new round of rapid growth, primarily driven by the low-carbon economy such as electric vehicles and energy efficient motors industries,” said Wang Zhenxi, Chairman of Beijing Zhong Ke San Huan High-Tech Co., which uses rare earth metals in production. Previously relying on rare earth stockpiles in China and with the ongoing crackdown on illegal rare earth exports this year, many market players believe that an upward trend for rare earth price is imminent.

Source: http://investorintel.com

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