China raises annual rare earth output quotas to record high

A front loader shifts soil containing rare earth minerals to be loaded at a port in Lianyungang, in east China's Jiangsu province, for export. (AFP)
Updated 08 November 2019

China raises annual rare earth output quotas to record high

  • Annual quotas for 2019 are highest volumes ever allocated
  • Beijing had raised prospect of limiting supply in US trade row

BEIJING: China lifted its annual rare earth output quotas on Friday by 10% to record-high levels for 2019, potentially easing fears the world’s dominant producer of the group of 17 prized minerals will restrict supply.
Beijing in late May raised the prospect of weaponizing its control of rare earths, used in everything from consumer electronics to sophisticated military equipment, in its trade war with the United States but has yet to announce any formal restrictions.
China is home to at least 85% of global rare earth processing capacity, according to Adamas Intelligence.
The full-year rare earth mining quota has been set at 132,000 tons for 2019 and the smelting and separation quota at 127,000 tons, the Ministry of Industry and Information Technology said in a statement.
The quotas, up from 120,000 tons and 115,000 tons, respectively, in 2018, are the “highest volume ever allocated” David Merriman, a London-based manager at commodity research firm Roskill, said in an email.
China has now increased the allowances for two years in a row and an official at the Association of China Rare Earth Industry confirmed the numbers were record highs.
They imply a quota of 72,000 tons for mining in the second half of 2019, up more than 54% from an unusually low level a year earlier.
For smelting and separation, or the processing of ore into material manufacturers can use, the second half quota is 69,500 tons.
The quota hikes could be seen as a message that China has “the capability to increase supply, making life difficult for (rare earths) under development in regions such as the Americas, EU and Australia,” Roskill’s Merriman said.
But it likely “has much more to do with the domestic Chinese supply-chain situation,” he added, noting that China had been increasingly looking overseas for feedstock amid an environmental crackdown at home.
The move will allow state-run miners and processors to “legally maintain market share,” Merriman said.
China typically issues the rare earth quotas twice a year for six-month periods. In March, the first-half quotas were set at 60,000 tons for mining and 57,500 tons for smelting and separation.
The late release of the full-year quotas comes as Beijing and Washington work to iron out the details on a so-called “phase one” deal to end trade hostilities.
China’s rare earth exports in October rose by 1.9% from the previous month to 3,639 tons, according to customs data released earlier on Friday.


Alibaba confirms huge Hong Kong public listing worth at least $13bn

Updated 15 November 2019

Alibaba confirms huge Hong Kong public listing worth at least $13bn

  • Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade
  • Alibaba Chief Executive Officer said the group wanted to participate in Hong Kong’s future

HONG KONG: Chinese technology giant Alibaba on Friday confirmed plans to list in Hong Kong in what it called a $13 billion vote of confidence in the turbulent city’s markets and a step forward in its plans to go global.
The enormous IPO, which Hong Kong had lobbied for, will come as a boost for authorities wrestling with pro-democracy protests that have tarnished the financial hub’s image for order and security and hammered its stock market.
Alibaba will offer 500 million shares at a maximum of HK$188 apiece to retail investors, the company said. The number eight is considered auspicious in China.
Over-allocation options could take the total value to more than $13 billion, making it one of the biggest IPOs in Hong Kong for a decade after insurance giant AIA raised $20.5 billion in 2010.
Alibaba had planned to list in the summer but called it off owing to the city’s long-running pro-democracy protests and the China-US trade war. The US and China are now working on sealing a partial trade deal.
Daniel Zhang, Alibaba Chief Executive Officer, said the group wanted to “contribute, in our small way, and participate in the future of Hong Kong.”
“During this time of ongoing change, we continue to believe that the future of Hong Kong remains bright,” he said.
The firm’s shares are already traded in New York. A second listing in Hong Kong is expected to curry favor with Beijing, which has sought to encourage its current and future big tech firms to list nearer to home after the loss of companies such as Baidu to Wall Street.
In the statement, Zhang said that when Alibaba went public in 2014 it “missed out on Hong Kong with regret.”
Mainland authorities have also stepped up moves to attract such listings, including launching a new technology board in Shanghai in July.
The listing comes after the city’s exchange tweaked the rules to allow double listings, while Chief Executive Carrie Lam had also been pushing Alibaba’s billionaire founder Jack Ma to sell shares in the city.
“The listing in Hong Kong will allow more of the company’s users and stakeholders in the Alibaba digital economy across Asia to invest and participate in Alibaba’s growth,” the company said.
It has long been expected to launch a multibillion-dollar stock listing in Hong Kong but appeared to postpone the offering because of political and economic turmoil.
Hong Kong’s key Hang Seng Index rose 0.48 percent in morning trading following the announcement
Chinese shoppers set new records for spending on Monday’s annual 24-hour “Singles’ Day” buying spree, despite an economic slowdown in the country and the worries over the US trade war.
It said consumers spent $38.3 billion on its platforms over that stretch, up 26 percent from the previous all-time high mark set last year.
Alibaba also said it saw record amounts of cross-border sales, underlining its plans to expand globally.
“Globalization is the future of Alibaba Group. We firmly believe the marriage of digital technology and commerce will bring about unprecedented change that will not be limited by borders,” Zhang said.