China Issues Regulations on Rare Earth Administration

At a Glance

• China has unveiled its first comprehensive regulation on rare earth resources, which took effect on October 1, 2024.
• The Regulations introduce a set of rules governing the mining, refining and separation, metal smelting, integrated utilization, product distribution, import and export of rare earths, and specify severe penalties for violations.
• The implementation of Regulations is likely to result in tighter supplies and higher costs of rare earths in the global market.

China has strengthened its control over rare metals. Following the implementation of export license administration on germanium and gallium effective August 1, 2023, and on antimony effective September 15, 2024, China has unveiled its first comprehensive regulation on rare earth resources (Regulations), which took effect on October 1, 2024.

The Regulations define rare earths as a group of elements that includes lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium, scandium and yttrium. The Regulations introduce a set of rules governing the mining, refining and separation, metal smelting, integrated utilization, product distribution, import and export of rare earths, and specify severe penalties for violations.

The following is a brief look at the key rules under the Regulations for administration of rare earths:

1. Strengthen the administration of rare earths mining and refining and separation. The government will determine and publish lists of rare earth mining entities and refining and separation entities. Entities and individuals not on the lists are prohibited from engaging in the mining or refining and separation of rare earths.
2. Implement a quantitative control system. The government will implement quantitative control on rare earth mining and rare earth refining and separation and optimize its dynamic management.
3. Regulate the integrated utilization of rare earths. Entities engaged in the integrated utilization of rare earths are prohibited from using rare earth minerals as raw materials for production activities.
4. Establish a rare earth product traceability information system. The government will set up a rare earth product traceability information system. Entities engaged in the mining, refining and separation, metal smelting, or integrated utilization of rare earths, or the export of rare earth products must truthfully record the flow information of rare earth product and enter it into the traceability system.
5. Emphasize compliance with existing export control rules. The Regulations stipulate that “import and export of rare earth products, as well as relevant technologies, processes, and equipment, shall comply with the laws and administrative regulations on foreign trade and import and export administration.” Rare earths have been subject to export license administration since from 2015.

China is the world’s leading producer and exporter of rare earths. The implementation of Regulations is likely to result in tighter supplies and higher costs of rare earths in the global market. Non-PRC companies in particular that rely on rare earths should closely monitor how the Regulations will impact global supply chains and the prices of rare earths, and explore alternative sources or adjust their supply chains if necessary.

Legal Clerk Lucy Zhang contributed to the preparation of this article.