China's quota for six key miners is set at 66,000 tonnes, which is 10% higher than the 60,000 tonnes in 2019’s first batch

Mining

China increased its first batch of mining quotas for 2020 on 20 February, despite concerns the virus could have major implications on production within the country (Credit: Wikimedia Commons/ Alexandra Pugachevsky)

China has increased its first batch of mining quotas for 2020, despite concerns the coronavirus could have major implications on production.

A statement from the Chinese government’s Ministry of Industry and Information Technology said the quota for six key miners is set at 66,000 tonnes — 10% higher than the 60,000 tonnes in 2019’s first batch.

It releases two figures across the year, and 2020’s first quota is half of last year’s record-high total of 132,000 tonnes — leaving the country in a strong position to improve on 2019’s final production figure.

But China’s mining sector could face huge issues if the coronavirus is not rapidly contained, with only about 20% of the nation’s rare-earth companies so far recommencing work, according to the country’s Global Times newspaper.

 

China increases 2020 mining quotas despite coronavirus fears

As China looks to increase its production, 56,425 tonnes of the first batch have been allocated for light rare earths, with the remaining output for medium and heavy rare earth metals.

The first-half concentrate output of tungsten, which is a strong metal used to harden steel and make cutting tools, is set at 52,500 tonnes — up from 49,835 tonnes a year ago.

China is the world’s biggest producer of rare earths, a collection of 17 elements that are used to make consumer products ranging from televisions to electric vehicles.

The materials held a high value last year when it was thought China may limit exports following the trade war with the US.

Despite the increased appetite to ramp up production, there was no announcement of a smelting and separation quota for the processing of rare earth ore into materials that manufacturers can use.

It is typically released at the same time as the mining quota and was set at 57,500 tonnes this time last year.

The statement revealed the second mining quota batch for 2020 will be released in the second quarter and the annual total will be capped below 140,000 tonnes— preserving the country’s resources under the government’s five-year plan for 2016 to 2020.

 

Coronavirus raises production concerns for mining companies operating in China

The BHP group, the world’s biggest miner, this week raised concerns about the potential impact of the coronavirus when it released its half-year financial results.

Copper and iron ore prices have taken a hit following the breakout of the virus, which originated in China and has been deemed a global health emergency.

Quarantine measures and a wider slowdown in economic and industrial activity in the country have cut demand in this important region, putting significant strain on commodity markets.

Although BHP expects the global economy to strengthen by between 3% and 3.5% this year, it warned those figures may have to be revised if the coronavirus is “not demonstrably-well contained” by the end of March.

The firm said that “while it remains early days, it is clear there will be demand loss in oil and demand deferral in steel and copper”.