The Chinese government on Saturday (29 June) issued a raft of regulations to tighten its grip over rare earths production, elements that are used in everything from electric cars to wind turbines.

The regulations, which will take effect on 1 October, stipulate that the rare earth resources belong to the state and that “no organisation or individual may encroach upon or damage” them.

The regulation is designed to protect and “rationally develop” rare earth resources while safeguarding the environment and securing the country’s resources, according to the document.

This move is part of China's broader efforts to ring-fence its trove of industrially important metals amid US actions to limit Chinese access to advanced chip technology.

Although China's underground resources are already state-owned, illegal mining and smelting of rare earth elements have persisted in the private sector. The new regulations reinforce the government's policy of tighter controls.

To enhance oversight of the industrial chain, government agencies will coordinate the mining and refining processes of the ores, ensuring the traceability of products.

The amount of mining and refining will be determined by factors such as resource reserves, industrial development, environmental protection, and market demand, the regulation said.

According to a study from the prestigious Brookings Institution, China presently produces some 60 per cent of the world’s rare earth elements and processes 85 per cent of them.

The latest data from the US Geological Survey (USGS), widely cited by Chinese authorities and companies, indicates global reserves of the 17 rare-earth elements stand at 110 million tonnes, with China leading at 44 million tonnes or 40 per cent of the total. Following China are Myanmar, Russia, India, and Australia.

In 2023, China led global production with 240,000 tonnes, about two-thirds of the world's output. The US was the second-largest producer, followed by Myanmar, both of which more than tripled their output over the year.

The new regulations also outline penalties for illegal activities related to rare earth mining, smelting, extraction, product distribution, and unlawful imports and exports.

Companies violating mining and processing regulations could face fines between five to ten times their illegal gains. If the illegal gains are less than 500,000 yuan, fines could reach up to 5 million yuan (US$687,000).

Additionally, companies involved in rare earth mining, refining, and export must record product flows and update a tracking system to ensure traceability.

Violations of these rules could result in fines of up to 200,000 yuan, with fines of up to 1 million yuan for failing to correct omissions when ordered.

U.S. Geological Survey (USGS)

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