BEIJING: China lifted its annual rare earth output quotas on Friday by 10% to record-high levels for 2019, potentially easing fears the world’s dominant producer of the group of 17 prized minerals will restrict supply.
Beijing in late May raised the prospect of weaponizing its control of rare earths, used in everything from consumer electronics to sophisticated military equipment, in its trade war with the United States but has yet to announce any formal restrictions.
China is home to at least 85% of global rare earth processing capacity, according to Adamas Intelligence.
The full-year rare earth mining quota has been set at 132,000 tons for 2019 and the smelting and separation quota at 127,000 tons, the Ministry of Industry and Information Technology said in a statement.
The quotas, up from 120,000 tons and 115,000 tons, respectively, in 2018, are the “highest volume ever allocated” David Merriman, a London-based manager at commodity research firm Roskill, said in an email.
China has now increased the allowances for two years in a row and an official at the Association of China Rare Earth Industry confirmed the numbers were record highs.
They imply a quota of 72,000 tons for mining in the second half of 2019, up more than 54% from an unusually low level a year earlier.
For smelting and separation, or the processing of ore into material manufacturers can use, the second half quota is 69,500 tons.
The quota hikes could be seen as a message that China has “the capability to increase supply, making life difficult for (rare earths) under development in regions such as the Americas, EU and Australia,” Roskill’s Merriman said.
But it likely “has much more to do with the domestic Chinese supply-chain situation,” he added, noting that China had been increasingly looking overseas for feedstock amid an environmental crackdown at home.
The move will allow state-run miners and processors to “legally maintain market share,” Merriman said.
China typically issues the rare earth quotas twice a year for six-month periods. In March, the first-half quotas were set at 60,000 tons for mining and 57,500 tons for smelting and separation.
The late release of the full-year quotas comes as Beijing and Washington work to iron out the details on a so-called “phase one” deal to end trade hostilities.
China’s rare earth exports in October rose by 1.9% from the previous month to 3,639 tons, according to customs data released earlier on Friday.
China raises annual rare earth output quotas to record high
China raises annual rare earth output quotas to record high
- Annual quotas for 2019 are highest volumes ever allocated
- Beijing had raised prospect of limiting supply in US trade row
Silver crosses $77 mark while gold, platinum stretch record highs
- Spot silver touched an all-time high of $77.40 earlier today, marking a 167% year-to-date surge driven by supply deficits
- Spot platinum rose 9.8% to $2,437.72 per ounce, while palladium surged 14 percent to $1,927.81, its highest level in over 3 years
Silver breached the $77 mark for the first time on Friday, while gold and platinum hit record highs, buoyed by expectations of US Federal Reserve rate cuts and geopolitical tensions that fueled safe-haven demand.
Spot silver jumped 7.5% to $77.30 per ounce, as of 1:53 p.m. ET (1853 GMT), after touching an all-time high of $77.40 earlier today, marking a 167% year-to-date surge driven by supply deficits, its designation as a US critical mineral, and strong investment inflows.
Spot gold was up 1.2% at $4,531.41 per ounce, after hitting a record $4,549.71 earlier. US gold futures for February delivery settled 1.1% higher at $4,552.70.
“Expectations for further Fed easing in 2026, a weak dollar and heightened geopolitical tensions are driving volatility in thin markets. While there is some risk of profit-taking before the year-end, the trend remains strong,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Markets are anticipating two rate cuts in 2026, with the first likely around mid-year amid speculation that US President Donald Trump could name a dovish Fed chair, reinforcing expectations for a more accommodative monetary stance.
The US dollar index was on track for a weekly decline, enhancing the appeal of dollar-priced gold for overseas buyers.
On the geopolitical front, the US carried out airstrikes against Daesh militants in northwest Nigeria, Trump said on Thursday.
“$80 in silver is within reach by year-end. For gold, the next objective is $4,686.61, with $5,000 likely in the first half of next year,” Grant added.
Gold remains poised for its strongest annual gain since 1979, underpinned by Fed policy easing, central bank purchases, ETF inflows, and ongoing de-dollarization trends.
On the physical demand side, gold discounts in India widened to their highest in more than six months this week as a relentless price rally curbed retail buying, while discounts in China narrowed sharply from last week’s five-year highs.
Elsewhere, spot platinum rose 9.8% to $2,437.72 per ounce, having earlier hit a record high of $2,454.12 while palladium surged 14% to $1,927.81, its highest level in more than three years.
All precious metals logged weekly gains, with platinum recording its strongest weekly rise on record.
