China tightening its grip on leaky rare earth supplies

China has launched a set of new rules to improve the traceability in its rare earth sector to ensure that sanctioned American firms can’t gain access to the nation’s precious metals.

The State Council recently unveiled a set of new regulations, set to take effect on October 1, to regulate the country’s rare earth industry. The new rules state that no organization or individual may appropriate or destroy rare earth deposits as the resources belong to the state.

The rules say that the Ministry of Industry and Information Technology (MIIT), together with relevant departments of the State Council, will prepare and organize the implementation of the rare earth industry development plan under local law.

The regulations also say that a company will be fined 5-10 times of any revenue it made from illegal activities in rare earth mining, smelting and extraction, product distribution, as well as unlawful imports and exports. If it has not yet made any revenue, it will face a fine between 500,000 to 2 million yuan (US$68,751 to $275,005).

A company will be fined 50,000 to 200,000 yuan if it fails to submit the operational information of its rare earth businesses to the nation’s product traceability system. If it still refuses to submit its data, it will be shut down and fined 200,000 to 1 million yuan.

A draft of the new rules was approved by the State Council in a meeting on April 26 this year and signed for implementation by Premier Li Qiang on June 22. The government officially announced the new rules on June 29.

“The importance of rare earths to China is similar to that of crude oil to the Middle East,” a columnist wrote in a commentary published on a social media account “Shumiyuan No.10” operated by the state-owned Global