Rare Earths: China’s supply chain of rare earth compounds is disrupted

Rare Earths: China's supply chain of rare earth compounds is disrupted

Since mid-July 2021, the border between China and Myanmar in Yunnan, including the main entry points, has been completely closed. During the border closure, the Chinese market did not allow Myanmar rare earth compounds to enter, nor could China export rare earth extractors to Myanmar's mining and processing plants.   

The China-Myanmar border has been closed twice between 2018 and 2021 for different reasons. The closure was reportedly due to the positive testing of the new crown virus by a Chinese miner based in Myanmar, and the closure measures were taken to prevent further transmission of the virus through people or goods.

Xinglu's view:

Rare earth compounds from Myanmar can be classified by customs code into three categories: mixed carbonate rare earths, rare earth oxides (excluding radon) and other rare earth compounds. From 2016 to 2020, China's total imports of rare earth compounds from Myanmar have increased sevenfold, from less than 5,000 tons per year to more than 35,000 tons per year (gross tons), a growth that coincides with the Chinese government's efforts to step up efforts to crack down on illegal rare earth mining at home, particularly in the south.

Myanmar's ion-absorbent rare earth mines are very similar to rare earth mines in southern China and are a key alternative to rare earth mines in the south. Myanmar has become an important source of rare earth raw materials for China as demand for heavy rare earths grows at Chinese processing plants. It is reported that by 2020, at least 50% of China's heavy rare earth production from Myanmar raw materials. All but one of China's six largest groups has relied heavily on Myanmar's imported raw materials over the past four years, but is now at risk of a broken supply chain due to a lack of alternative rare earth resources. Given that Myanmar's new crown outbreak has not improved, this means that the border between the two countries is unlikely to reopen any time soon.

Xinglu learned that due to the shortage of raw materials, Guangdong's four rare earth separation plants have all been discontinued, Jiangxi many rare earth plants are also scheduled to end in August after the depletion of inventory of raw materials, and individual large inventory of factories also choose to produce on order to ensure that raw materials inventory continued.

China's quota for heavy rare earths is expected to exceed 22,000 tonnes in 2021, up 20 per cent from last year, but actual production will continue to fall below the quota in 2021. In the current environment, only a few enterprises can continue to operate, jiangxi all ion adsorption rare earth mines are in a state of shutdown, only a few new mines are still in the process of applying for mining / operating licenses, resulting in the progress process is still very slow.

Despite continued price increases, the continued disruption in China's imports of rare earth raw materials is expected to affect exports of permanent magnets and downstream rare earth products. Reduced supply of rare earths in China will highlight the possibility of overseas development of alternative resources for rare earth projects, which are also constrained by the size of overseas consumer markets.

Post time: Sep-16-2021