Rare earths are indispensable important elements and key strategic resources in modern industry. On June 29, the State Council officially issued the Regulations on the Administration of Rare Earths (hereinafter referred to as the Regulations), effective from October 1, 2024. The Regulations clarify the management requirements for rare earth mining, smelting and separation, establish a total volume control system, and standardize the comprehensive utilization of rare earths. In response, the two major rare earth giants in the north and south, which hold a pivotal position in China's rare earth industry, both gave positive evaluations. It is worth noting that the application fields of rare earths are currently being continuously broadened.

　　Strengthening the protection of rare earth resources

　　The Regulations emphasize strengthening the protection of rare earth resources and improving the rare earth management system. The Regulations clarify that rare earth resources belong to the state, and no organization or individual may encroach upon or destroy rare earth resources; the state implements protective mining of rare earth resources. They specify the responsibilities of relevant departments such as the Ministry of Industry and Information Technology and the Ministry of Natural Resources under the State Council in rare earth management, and clarify that local people's governments at or above the county level are responsible for rare earth management work in their respective regions. It is worth noting that the Regulations take effect on October 1, 2024.

　　Focusing on promoting the high-quality development of the rare earth industry, the Regulations clarify that the state implements unified planning for the development of the rare earth industry and encourages and supports the research, development and application of new technologies, new processes, new products, new materials and new equipment in the rare earth industry. They stipulate that rare earth production enterprises shall comply with laws and regulations on mineral resources, energy conservation and environmental protection, cleaner production, work safety and fire protection, so as to ensure green development and safe production.

　　In terms of improving the construction of the regulatory system for the entire rare earth industry chain, the Regulations stipulate the implementation of total volume control over rare earth mining and rare earth smelting and separation, and optimize dynamic management. They further standardize the comprehensive utilization of rare earths, establish a product traceability system, and strictly manage circulation. Among other provisions, it is stipulated that the competent department of industry and information technology under the State Council, together with relevant departments under the State Council, shall determine rare earth mining enterprises and rare earth smelting and separation enterprises and announce them to the public. No other organization or individual may engage in rare earth mining or rare earth smelting and separation.

　　Relevant officials from the Ministry of Justice and the Ministry of Industry and Information Technology stated that, taking the implementation of the Regulations as an opportunity and guided by industrial scientific and technological innovation, they will support enterprises in the research, development and industrialization of new technologies, new processes, new products, new materials and new equipment, accelerate the high-end, intelligent and green transformation and upgrading of the industry, and improve the quality and level of development of the rare earth industry.

　　Milestone significance

　　Regarding the Regulations issued this time, Ge Honglin, President of the China Nonferrous Metals Industry Association, Ao Hong, Chairman of China Rare Earth Group, and Liu Peixun, Deputy General Manager of Baogang (Group) Co. and Chairman of Northern Rare Earth, published articles on the official website of the Ministry of Industry and Information Technology on June 29 to provide interpretations.

　　Liu Peixun pointed out that the Regulations are the first to regulate the development and utilization of rare earth resources in the form of administrative legislation, and are a landmark, overarching and comprehensive basic regulation. The Regulations establish a governance system from the state to local governments and then to enterprises, with layered management and each fulfilling its own duties and responsibilities, and for the first time set penalty standards for illegal and non-compliant acts, further increasing pressure to guide the rectification of industry order, which is more conducive to the standardized management of the rare earth industry.

　　Ge Honglin stated that the problems of China's rare earth industry being large but not strong and comprehensive but not refined still exist, and there remain some difficulties and challenges in areas such as institutional safeguard linkage, protective development of resources, ecological environmental protection, original basic innovation, and standardization of industry order. The Regulations highlight the characteristics of protective development and adherence to green development, which will effectively reduce the industry's demand for non-renewable mineral resources, extend the exploitation and service life of China's mineral resources, reduce the harm of waste emissions to the natural ecology, and powerfully promote the safe, green and sustainable development of China's rare earth industry.

　　Ao Hong pointed out that rare earths are indispensable key materials for transforming and upgrading traditional industries, developing strategic emerging industries and the national defense science and technology industry. With the transformation and upgrading of strategic emerging industries such as new energy vehicles, wind power generation and intelligent manufacturing, as well as traditional industries such as energy-saving motors, global demand for rare earths is increasing rapidly.

　　In Ao Hong's view, there are still some deep-seated problems in the development of China's rare earth industry, especially in terms of green processes, high-end products and intelligent manufacturing, which need to be improved; the industrial structure needs to be further optimized, and the industrial order needs to be further standardized. The issuance and implementation of the Regulations are conducive to deepening supply-side reform and ensuring the security and stability of the supply chain of strategic resource industries.

　　Application fields continuously broadening

　　Rare earth elements are the collective name for 17 elements, namely the lanthanide elements, yttrium and scandium. Their physical and chemical properties are similar. Adding rare earths during the preparation of various materials can significantly change material properties and improve material performance. Therefore, rare earths have long been widely used in high-precision and advanced fields such as chips, computer memory, rechargeable batteries, permanent magnet and superconducting materials, and are known as the "vitamins of modern industry."

　　According to a research report by Central China Securities, China's rare earth reserves, rare earth ore output and rare earth consumption all rank ** in the world, and China is the ** country with production capacity for all types of products across the entire rare earth industry chain. In China's rare earth industry, the downstream demand segment with the largest share is permanent magnet materials, accounting for 42%, followed by metallurgical machinery, petrochemicals, glass and ceramics, hydrogen storage materials, luminescent materials, agriculture and light textiles, polishing materials and catalytic materials, etc.

　　As a type of metal material, rare earth materials possess unique physical and chemical properties. In recent years, rare earth materials have been increasingly widely used in the medical field. According to Science and Technology Daily, Zhu Haomiao, Deputy Director of the Xiamen Key Laboratory of Rare Earth Photoelectric Functional Materials, introduced that rare earth materials are expected to be used to develop targeted drugs similar to missiles.

　　Hong Maochun, an academician of the Chinese Academy of Sciences who has long been engaged in inorganic chemistry research, stated that the unique functions of rare earths have broad application prospects in the biomedical field. "We hope to study the mechanisms of action of more rare earth ions or rare earth compounds in organisms, so as to develop medical materials and drugs and achieve precise diagnosis and treatment of diseases."

　　Sinolink Securities believes that the "equipment renewal" and "trade-in" initiatives are expected to contribute exceeding-expectation increments in the industrial motor field. Under optimistic, neutral and conservative assumptions, the compound growth rates of demand in this field from 2023 to 2026 are estimated at 101%, 65% and 44%, respectively. With the continued prosperity in fields such as new energy vehicles, the overall year-on-year growth rates of rare earth demand from 2024 to 2026 are 12%, 12% and 12%, respectively. Sinolink Securities estimates that a full-year quota growth rate of 12% for rare earths in 2024 may be the equilibrium point for supply and demand.