February 8, 2024 - China has set quotas for the first batch of rare earth mining and smelting in 2024 at 135,000 mt and 127,000 mt, respectively, raising the quota volume for both the operations from the last year's first-batch quotas, according to a Feb. 6 statement from the Ministry of Industry and Information Technology and the Ministry of Natural Resources.

Rare earth metals are about a group of 17 elements that are considered highly critical for energy transition. China leads the global rare earth sector in terms of production and refining technologies.

With China's dominance, it controls its rare earth supply through the closely watched quota system.

The quotas for rare earth mining and smelting for 2024 are 12.5% and 10.4% higher, respectively, from the first batch quota released in March 2023.

But despite a sharp year-on-year rise in 2024 quota, the increase was still below than the 19% and 18.3% year-on-year increase witnessed for the first batch quota for mining and smelting, respectively, for 2023, S&P Global Commodity Insights calculations showed.

The quota for medium to heavy rare earths saw a decline of 7.3% year on year, which highlighted its scarcity and strategic position, China's ministries said in the statement. Meanwhile, the quota of light rare earths saw an increase of 14.5% from the previous year.

The total mining and smelting output quota in 2023 reached 255,000 mt and 243,850 mt, up 21.4% and 20.7%, respectively, from a year earlier, according to ministry data.

Rare earth is a product subject to total production control and management by the state, and no enterprise or individual can produce it without or beyond the quota, according to the statement.

Rare earth metals like neodymium, praseodymium, dysprosium and terbium are key to the production of permanent magnets used in electric vehicles (EVs) and wind turbines.

China is also the world's largest consumer and importer of rare earth metals.

China imported 175,853 mt of rare earth metals in 2023, up 45% from a year earlier, according to China's latest customs data. At the same time, China exported 52,307 mt of rare earth metals, up 7.3% from a year ago.