Nikkei reported (January 16) that China's Ministry of Industry and Information Technology said (January 15) that it is drafting a 29-part Law to strengthen regulation over China's rare earth metals industry. Whereas current regulations focus on the production stage -- such as mine development, smelting or separation -- the draft law of the new regulations seeks to manage the "entire industry chain" of the precious ore, including refining, product transport and all the way up to exports. A tracking system for rare-earth products will also be established, enhancing "closed-loop management" of the industrial chain. Regulatory responsibilities, the project approval process and quota management are covered by the 29-part draft. The rules state that companies are obligated to follow export control laws and regulations regarding the export and import of rare-earth minerals. The new rules are expected to be implemented from early this year. Analysts afeel the new regulations have been prompted by the current tensions with the US.  

(Comment: (i) The U.S., which relies on China for 80% of its rare-earth imports, and Australia are independently spearheading an initiative to create an alternate supply chain, despite challenges including ore quality and costs. Australian rare earths mining company Lynas and American partner Blue Line are building a Texas processing facility, which will handle such heavy rare earths such as dysprosium, used in magnets. The Texas site is the only one of its kind without Chinese involvement. Japan is also seeking alternate supplies of rare earths, with an eye on lowering its reliance on Chinese imports from 58% to 50% or less by 2025.

(ii) Rare earths are essential for the powerful magnets found in electric-vehicle motors and a variety of other applications, including drones and missiles. Japanese companies use Chinese rare earths to produce magnets for customers in the U.S. and elsewhere. Japan suffered when China banned exports of rare earths to Japan in 2010.)