Chinese media confirms rumours of rare earth stockpiling by state

Chinese media sources have confirmed rumours of the stockpiling of rare earths by the government which have been in circulation since earlier this month, with China’s leading English-language daily reporting that the central government has budgeted around US$949 million for the undertaking.

Shi Yaoqiang, an official with the rare earth division of China’s Ministry of Industry and Information Technology, told the China Daily that the central government is “building up rare earth reserves.”

Although Shi remained  taciturn on the details, a senior figure from Baogang Group, which is the parent company of China’s largest rare earth producer by output and also involved in the stockpiling, said the purchase would involve around US$949 million.

The China Securities Journal first reported on 5 July that the central government’s current round of rare earth stockpiling had commenced.

More recent reports by the Chinese financial press indicate that the stockpiling would focus on “minerals which will have major applications in the future but are currently scarce,” and that the stockpiling will be based primarily on “strategic considerations”.

According to other Chinese sources, the government’s stockpiling initiative has been prompted by the downturn in rare earth prices since late 2011, due to the poor performance and attenuated demand of downstream industries such as home appliances, LED’s and wind power.  The government hopes to both accumulate rare earths at a discount price as well as revive confidence in the market.