Heavy vs light

Permanent magnet materials and products are the most widely used forms of rare earth, representing around 70 percent of all applications, Ganzhou Fortune Electronic Co's Pang said.

Heavier rare earth elements, which are relatively abundant in Ganzhou, account for about 5 percent in mixtures with lighter ones. These heavier metals are necessary for the more sophisticated products.

"Compared with light rare earths, heavy ones are more valuable," Pang said. "Light rare earth resources are not that rare globally, but heavy rare earth materials are really scarce. And China has the biggest heavy rare earth reserves in the world."

The Ganzhou-based company, founded in 2011, now has an annual production capacity of 2,000 tons of high performance, sintered magnetic metals - metals that are merged in a heating process. Its products are widely used in energy-saving motors, new energy vehicles, information technology, unmanned aerial vehicles, medical equipment, energy-saving household appliances and high-tech trains.

The company reported a surge in revenues of nearly 30 percent year-on-year, hitting 130 million yuan in 2018.

China Northern Rare Earth (Group) High-tech Co in Baotou, Inner Mongolia, the country's largest rare earth miner and producer of refined metals, is also gearing up to expand its high-end rare earth offerings. It predicts its revenues will surge to 24 billion yuan in 2020 from 13.96 billion yuan last year.

"More efforts are needed to meet the growing demand for some light rare earths, to better regulate mining and processing, to encourage the import of more qualified overseas rare earth resources and to foster the sustainable development of domestic resources," a company spokesman said.

Leaks in system

Rare earth exports by China fell to 3,640 tons in May from 4,329 tons in April, according to the General Administration of Customs. For the first five months of this year, China exported 19,267 tons of rare earths, down 7.2 percent year-on-year.

Meanwhile, prices rose. The price of neodymium (a metal used in magnets and speakers) increased 26.5 percent in late May from $50 per kilogram to $63.25 per kg. Dysprosium (a metal used in lasers), erbium oxide and gadolinium oxide (used in medical imaging and fuel cells) were up around 10 percent in early summer, Reuters reported.

But trade was affected little. The US government has exempted rare earths from its tariffs on Chinese goods.

"China's rare earth export quota didn't have the desired effect on the importing countries, especially Western countries, because smuggling of rare earths was rampant and some export companies falsified the customs code to evade the quota and continued to export them," Jin Baisong, a retired researcher at the international trade academy, told China Daily. Also, customers are able to buy from other suppliers or seek their own new sources.