SHANGHAI Oct 18 China's Baotou Steel Rare-Earth
Hi-Tech said it will suspend its smelting and
separation operations for one month from Wednesday, in an effort
to stimulate the market.
Baotou Rare Earth, China's top rare earths producer, said in
a filing to the Shanghai Stock Exchange on Tuesday that the move
was aimed at supporting Beijing's efforts to preserve rare earth
resources and end a sustained decline in prices.
"In the circumstances of a continuing fall in prices, tepid
demand and oversupply, Baotou will halt smelting and separation
at its processing units from Oct. 19 to further stabilise the
market and balance supply and demand," it said.
Most of China's rare earth prices remained unchanged last
week from two weeks ago, but a few in the complex fell -- a sign
that the industry is still in a correction cycle from sky-high
levels seen earlier this year after Beijing tightened controls
over production and mining.
The company will stop supplying rare earth ores to its own
processing plants and other external plants, it added.
It is not the company's first attempt to stem the decline in
rare earth prices. Last month, it decided to buy an unspecified
volume of praseodymium-neodymium oxide at above market prices.
China has resolved to streamline the chaotic rare earth
sector by encouraging consolidation and cracking down on illegal
private production, cited as the key reason for the decline in
prices over the past few months.
It has imposed a national output cap of 93,800 tonnes for
2011, and has vowed to crack down on producers that exceed their
It launched a four-month inspection campaign at the
beginning of August to ensure that production quotas, pollution
standards and consolidation targets were being met.
The industry ministry said in a statement posted on its
website last Friday that it planned to "strengthen monitoring
and inspections" in the coming months, saying that it would pay
particular attention to punishing traders and processors that
receive illegally-mined rare earth products.
The region of Inner Mongolia in China's northeast, the
source of most of the country's light rare earths, has forced a
number of small firms to merge with Baotou Rare-Earth ,
and has also been cutting off electricity supplies to private
producers to force them to shut down, local media reported.
With incentives high for private producers, China has
traditionally struggled to impose its will on the sector. Total
output exceeded the production quota by around 40,000 tonnes
last year, and traders also resorted to smuggling in order to
get round a strict export cap.
For a Q&A on China's rare earth sector crackdown:
According to local media reports, unlicenced private firms
in Inner Mongolia are still able to obtain rare earth ores by
disguising shipments as iron ore.
(Editing by Jacqueline Wong)