About 40-50 percent of the rare-earth enterprises in Ganzhou, East China's Jiangxi Province - most in the middle and downstream segments of the industry chain - have halted production in recent days to rectify environmental protection issues, industry insiders told the Global Times.
Ganzhou is a main production base for China's rare-earths. As the suspension is expected to last until the end of April, industry analysts predict that rare-earth shortages, coupled with logistics issues in shipping rare earths from Myanmar, could further strain China's exports of rare-earth products in April and could drive its prices higher.
"One of our rare-earth waste processing factories suspended production near the end of March," a manager at a state-owned rare-earth enterprise in Ganzhou surnamed Yang told the Global Times on Thursday.
The closures came ahead of the central government's No.4 ecological and environmental protection inspection group's arrival in Jiangxi for a trip that runs from Wednesday to May 7. The group will investigate local environmental protection work.
Close to half of the rare-earth producers in Ganzhou have halted operations, according to local industry insiders. Some, like Yang's company, shut down before the group's arrival to rectify environmental issues.
Industry insiders said that the sudden closures were partly due to 24/7 production, which led to "serious environmental effects" such as the discharge of off-standard sewage.
"Since October, all rare-earth manufacturers in Ganzhou have been running at full swing to capitalize on booming orders and recoup losses sustained during the coronavirus outbreak. Most of them did not take a break even during the Spring Festival holiday, exacerbating the environmental issue," a manager of a state-owned rare-earth enterprise, who spoke on condition of anonymity, told the Global Times on Thursday.
The manager added that most of the suspended facilities are plants specializing in rare-earth waste separation, a key procedure in processing rare-earth oxides that could pollute the environment most.
"It is necessary to comply with environmental protection rules in daily work. Those who abide by strict environmental protection rules still operate as usual," he noted.
The Global Times also learned from several major rare-earth magnet producers in Ganzhou that their production has not been affected.
It is not clear when the factories will start humming again. Some industry insiders expect they can resume work by the end of April when environmental issues are all settled.
According to local media reports, the supply of neodymium praseodymium oxide, a key rare-earth oxide for making permanent rare-earth magnets, could be reduced by 1,200 tons a month due to the factory suspension.
Wu Chenhui, an independent rare-earth market observer, told the Global Times on Thursday that the plunge in rare-earth oxide supplies will have a "staged impact," pushing up prices in the short term.
"But the impact may also spread around the globe if production is suspended for more than a month, exerting pressure on global supply," Wu said.
From January to February, China's rare-earth exports surged 28.8 percent year-on-year to 7,068 tons, customs data showed.