China’s Rare Earths Firms' Capacity Cut by At Least 25% after Ports with Myanmar Close

The Global Times learns that one of Chinese largest rare earths production bases, Ganzhou City, Jiangxi Province, has seen its capacity reduced by at least 25 percent compared to last year, as the main border gate for rare earth minerals shipped from Myanmar to China was closed again at the beginning of the year, which largely affected the supply of raw materials.

Myanmar accounts for about half of Chinese supply of rare earth minerals, and China is the world's largest exporter of rare earth products, dominating the mid- and downstream chain. As a result, industry insiders stress that global industries ranging from electronics, automobiles and even military weapons cannot be produced without rare earth components, so they could see the tight supply of rare earths persist, driving up global prices for a long time.

Chinese rare-earth firms capacity cut by 25 percent after ports with Myanmar close image

The Menglong port in Xishuangbanna Dai Autonomous Prefecture in Yunnan Province recently reopened after being closed for about 240 days for epidemic prevention reasons. The port, which borders Myanmar, transports 900,000 tons of cargo annually.

Industry sources told the Global Times that the port only ships a "very limited" amount of rare-earth minerals from Myanmar. "Other border ports, including one in Yunnan's Diantan township, which is considered the main channel for rare earth minerals shipments, remain closed. We have not received any notice of the reopening of the port," Yang, the manager of a state-owned rare earth company based in Ganzhou, told the Global Times.

He added that the situation between the two sides was further exacerbated by the suspension of not only Myanmar shipments, but also shipments of auxiliary materials used by China for mining rare earths.

Myanmar resumed rare earth exports at the end of November last year after the reopening of two China-Myanmar border gates. According to thehindu.com, one crossing is the Kyin San Kyawt border gate, about 11 kilometers from the northern Burmese city of Muse, and the other is the Chinshwehaw border gate.

According to Young, several thousand tons of rare earth ore were shipped to our country at the time, but then around the beginning of 2022, these border crossings were closed again, so rare earth shipments were again suspended.

Chinese rare-earth firms capacity cut by at least 25 percent image

"Due to the oversupply of raw materials from Myanmar, local processing plants in Ganzhou are only able to operate at 75 percent of their full capacity. Some are even lower," Yang said, underscoring the dire supply situation.

Mr. Wu, an independent rare earth industry analyst, noted that Myanmar is a major upstream supplier in the global chain, with almost all rare earth minerals shipped to China for processing. Since Myanmar accounts for 50% of Chinese mineral supply, this means that the global market could also temporarily lose 50% of its raw material supply. 

"This will exacerbate the imbalance between supply and demand. Some countries have strategic reserves of rare earths for three to six months, but this is only short-term," the industry source told the Global Times, noting that despite a mild decline in recent days, rare earth prices will continue to "operate in a relatively high range" and there may be a new round of price increases ahead.

In early March, Chinese industry regulator summoned the country's top rare earth companies, including the newly formed conglomerate China Rare Earth Group, and asked them to push for a complete pricing mechanism that would work together to "restore the price of the scarce material to a reasonable level.

 

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