The China Minmetals Group headquarters in Beijing. The company is to stop rare-earth production in August as the industry may have already met its annual limit. [Photo / Bloomberg]

Minmetals calls on industry to adhere to government guidelines

BEIJING - The rare-earth processor China Minmetals Nonferrous Metals Co said it is planning to halt output to adhere to the country's mandatory production limit.

That comes amid a recent stabilization of rare-earth prices, which have surged fourfold since the start of this year.

The company, which has an annual rare-earth processing capacity of 14,000 tons, "hasn't decided when will be the specific date to halt production", anonymous sources from the company's marketing department was quoted by National Business Daily as saying on Tuesday.

The non-ferrous arm of State-owned China Minmetals Corp, the nation's biggest metals trading firm, issued an appeal on Tuesday to other domestic rare-earth processing plants to also avoid illegal over-production.

The appeal came after the nation's annual output limit for smelting and processing rare-earths products had been reached.

"We will definitely use up the quota before the end of this year," Gong Bin, chairman of Ganzhou Qiandong Rare Earths Group Co in Jiangxi province, one of the country's major deposits of medium and heavy rare earths, told China Daily.

He said the company is compiling its output volume and will halt production if the figure is beyond the limit.

Authorities, including the Ministry of Industry and Information Technology, in April set the rare-earth output limit at 93,800 tons this year.

However, rare-earth producers have not adhered to government guidelines because of weak oversight.

China's annual rare-earth output has surpassed 100,000 tons on average since 2005. The limit set by the government is around 80,000 tons a year.

Minmetals said that the halt is in accordance with the government's requirements to protect the environment.

China, the world's biggest producer of rare earths, which are vital for high-tech devices such as Apple Inc iPhones, tightened exploration of the valuable metals in recent years to prevent over-exploitation.

"The domestic smelting and processing capacity of rare earths is far beyond the output of rare-earth ore. In this regard, the production halt will help ease over-capacity," said Liu Minda, an analyst at Huatai Securities Co Ltd.

Rare-earth prices have increased more than fourfold this year after China began consolidating the industry.

However, prices have leveled since July. The price of cerium oxide has dropped by 4.11 percent in a month.

Processing companies are also betting that the halt will ward off further price declines, said Wei Chishan, an analyst at Shanghai Metals Market, an integrated online news and information provider for the Chinese non-ferrous metal market.

He added it is still too early to predict how the halt will affect prices and if other companies will follow suit.