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| Rare Earth |
Beijing Tightens Rare Earth Control Without Public Disclosure
China rare earth quotas for 2025 were issued discreetly last month, bypassing the government’s usual public announcement. Industry sources confirm that state-owned companies received the quotas under instructions not to disclose volumes for national security reasons. This unpublicized issuance marks a sharp departure from precedent and signals Beijing's increasing strategic sensitivity toward the rare earth sector.
Rare earths—17 critical elements used in EVs, wind turbines, defense, and robotics—remain vital to global industrial supply chains. China, the world’s largest rare earth producer, typically announces quotas twice annually via the Ministry of Industry and Information Technology (MIIT). However, the 2025 quotas were delayed and issued without explanation, reflecting rising geopolitical tensions and export control measures.
Strategic Use of Quotas Reflects Trade Weaponization
China continues to use the quota mechanism to consolidate control and limit foreign access. In retaliation for rising US tariffs, Beijing added several rare earths and magnets to its export restriction list. These moves disrupted global supply chains, forcing some non-Chinese automakers to scale back production. As a result, China’s opaque handling of the 2025 quotas raises concerns about trade weaponization and supply security.
In 2024, the mining quota totaled 270,000 metric tons, a modest 5.9% y/y growth compared to 21.4% the previous year. Smelting and separation quotas rose 4.2% to 254,000 tons. However, access was limited to two SOEs—China Rare Earth Group and China Northern Rare Earth Group High-Tech—down from six in prior years. This narrowing of access indicates a deliberate consolidation strategy.
Policy Dispute Delayed Quota Issuance in Early 2025
Meanwhile, the delay in 2025 quotas stemmed from a proposal to include imported rare earth ore, which drew resistance from processors reliant on overseas feedstock. Industry stakeholders feared the change would restrict raw material access and compromise production. According to insiders, this dispute contributed to the unusual timeline and secrecy surrounding the current quota release.
The MIIT has not responded to inquiries about the shift in communication. However, Beijing’s move aligns with its broader agenda of supply chain sovereignty and strategic resource nationalism. This development could affect rare earth pricing, particularly for heavy rare earths, and reshape global investment strategies in rare earth mining outside China.
ScrapInsight Commentary
China’s non-disclosure of 2025 rare earth quotas represents a significant policy shift. It underscores rising strategic concerns and positions rare earths as geopolitical levers. Markets should expect increased volatility and higher premiums for non-Chinese supply, reinforcing the importance of supply diversification and recycling.
