China Rare Rare Earth Co., Ltd, a subsidiary of Chinalco, announced on Thursday that it will cut output of rare earth smelting and separation products this year to prop up prices. The cut will be in a range between 5 percent and 10 percent of the production quota assigned by the Ministry of Industry and Information Technology (MIIT) to the company.
Earlier, in April, the MIIT unveiled the first batch of total rare earth production quotas for 2015. Chinalco saw the production quota for rare earth smelting and separation products stand at 7,537 metric tons (tonnes). So far, the six large rare earth companies designated by the MIIT to consolidate rare earth industry have all announced cuts in production so as to rally prices.
The six companies are Baogang Group, China Minmetals, Chinalco, Guangdong Rare Earth Corp, Ganzhou Rare Earth Group and Xiamen Tungsten (600549.SH). In the short term, rare earth prices are expected to rebound. However, falling demand, oversupply, overcapacity and illegal mining and production are main reasons behind the price downtrend, said analysts.
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