Michael Bailey reports that China has slashed its production quota for the rare earth minerals crucial to high-growth industries like electric vehicles and wind turbines, in a potential boon for Australian mines which produce 15 per cent of global output. Production quotas for rare earth ores are announced twice a year by China's ministries of natural resources and industry, and the first for 2018 have been set at 70 per cent of 2017 levels. China produces around 80 per cent of the world's 17 different types of rare earth elements, and the quotas allowed it to "protect and rationally exploit superior minerals", the ministries said in a joint statement.
While China's total production of rare earths had been flat or declining for several years as the government sought to close or regulate illegal and environmentally damaging mines, this quota cut was potentially the biggest shock to the market since the Chinese temporarily suspended exports of rare earths in 2011, causing a tenfold spike in prices, according to Argonaut Securities research director Matt Keane.
"Producers outside of China will be in heavy demand," Mr Keane predicted, noting that rare earths were crucial to the building of both electric cars – where a combination of neodymium and dysprosium help regulate battery temperature – and wind turbines, where those two elements alongside praseodymium allow for a 'permanent magnet generator' which means the turbine does not need a costly gear box, and improves its yield in light winds.
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