Following the implementation of various measures such as purchase and storage, industrial integration, etc., yesterday, the Ministry of Industry and Information Technology made another sharp sword - the access conditions for the rare earth industry (draft for comments, hereinafter referred to as access conditions). According to an explanation from the Ministry of Industry and Information Technology, more than 20% of the rare earth mining production capacity nationwide fails to meet the access standards. Among them, half of the production capacity in Jiangxi will be below the threshold, and few in Shandong can meet the requirements.

Yesterday, the Shanghai and Shenzhen stock markets rebounded strongly. Baotou Steel Rare Earth, North Mine Magnetic Materials, and Zhongke Sanhuan in the rare earth and magnetic material sectors rose by the daily limit. Hengdian East Magnetics and Ningbo Yunsheng were also in the forefront.

The access conditions set the threshold for rare earth mining and smelting in terms of production layout conditions, production scale, technology and equipment, energy consumption, comprehensive utilization of resources, and environmental protection. A person from the Ministry of Industry and Information Technology said that this is the first time that my country has set a threshold for rare earth access in terms of production scale.

According to this condition, the production and construction scale of light rare earth mining enterprises should handle no less than 300,000 tons of ore per year; the production capacity of ionic rare earth mining enterprises should be no less than 3,000 tons per year. The scale of smelting and separation projects using mixed rare earth ore should not be less than 8,000 tons per year; the scale of smelting and separation projects using bastnaesite should not be less than 5,000 tons per year; the scale of smelting and separation projects using southern ionic rare earth ore should not be less than Below 3000 tons/year. The scale of rare earth metal smelting projects should not be less than 1,500 tons per year.

In addition, the minimum capital ratio of the above-mentioned fixed asset investment projects is 40%.

A person from the Ministry of Industry and Information Technology said that setting certain thresholds for access conditions is to stop the competition within the industry to lower prices and revive China's rare earth industry.

The main producing areas of rare earths in China are: light rare earth resources in Baotou, Inner Mongolia and Yaniuping in Sichuan; ionic rare earths (medium and heavy) in Guangdong and Jiangxi. Relevant sources said that China's current rare earth production capacity is about 200,000 tons, and the production capacity of enterprises with access conditions is about 160,000 tons. This means that about 20% of the total capacity will be eliminated. However, this does not change the current oversupply of rare earths. The Ministry of Land and Resources recently issued the "2010 Tungsten Antimony and Rare Earth Mining Total Control Index", the total control index for rare earth mining is 89,200 tons.

It is reported that relevant departments will conduct investment management, land supply, environmental protection approval, credit financing, etc. for relevant enterprises according to the access conditions. Enterprises that do not meet the above access conditions will be given a transition period of two years. "It can't simply expand production, it can only be through joint reorganization," said a person close to policy making.

Baotou Steel Rare Earth is the only rare earth listed company. Its parent company, Baotou Steel Group, belongs to Inner Mongolia Bayan Obo, which is the largest light rare earth mine in China, accounting for 83% of its resources. As a leading enterprise, Baotou Steel Rare Earth will become the beneficiary of the new threshold. Due to a series of measures such as purchase and storage, the gross profit margin of Baotou Steel has increased rapidly since the fourth quarter of last year.

Taiyuan Gangyu, Zhongke Sanhuan and Ningbo Yunsheng are all rare earth downstream magnetic material industries. The North Mine Magnetic Materials and Hengdian East Magnetic Materials are traditional magnetic materials. Xiangcai Securities Research Institute believes that rare earths are still in excess before 2012, but the demand for downstream magnetic materials will explode with the outbreak of wind power equipment, consumer electronics, LED, electric vehicles and other industries.