Supply constraints are one of the main reasons for this round of rare earth prices. According to Antaike data, global rare earth mines (equivalent to REO) output in 2020 will be 233,000 tons, a year-on-year increase of 6.6%. The increase in output is mainly due to the increase in Chinese quotas and the United States. At the full production of the Mountain Pass mine, China and the United States produced 140,000 tons and 35,000 tons respectively; other countries were affected by the epidemic to varying degrees. Under the leadership of Lynas, Australia’s output was basically flat at 21,000 tons, while Myanmar’s output was basically the same at 21,000 tons due to the epidemic. And the domestic situation affects the content dropped from about 27,700 tons in 2019 to 25,300 tons, which has an adverse impact on the production of medium and heavy rare earth mines. Other countries are mainly Russia, Madagascar, etc., with an output of about 3,000 tons and 2,000 tons.

The strong demand for rare earths in 2020 caused a mismatch between supply and demand and the continued increase in rare earth prices are important reasons for the increase in rare earth mining quotas in China, to prevent the sharp rise of upstream raw materials from harming the industrial chain. The first batch of rare earth mining quotas issued by the Ministry of Industry and Information Technology on February 18, 2021 increased by 27.3% year-on-year to 84,000 tons of REO. If the quotas in the second half of the year also increase in proportion, the annual mining quotas will increase by 20% to 178,000 tons.

Domestic smelting separation quotas have also increased in the same proportion. At the same time, overseas rare earth mines have accelerated the resumption and mining progress under the stimulation of high prices. It is expected that the global increase in rare earth mines will mainly rely on domestic smelting capacity. According to our calculations, the increase in overseas rare earth mines in 2021 is limited, and the Mountain Pass mine in the United States is basically at full capacity. The increase may mainly come from the Brown Mountain in the northern mining of the United States; the Yandicoogina mine of Hastings in Australia The environmental permit was obtained in April 2020, and the construction progress is expected to be accelerated in 2021; Australia's Peak Resources Co., Ltd. is in the final stage of mining approval in Ngualla Mining, Tanzania, and is expected to enter the mining phase in 2021, but the overall increase in overseas rare earth mines The quantity is limited.

We estimate that the global rare earth mine (REO) output in 2021 will be 270,000-280,000 tons, a year-on-year increase of about 20% from the 233,000 tons in 2020, of which the domestic output will increase by about 38,000 tons, and the overseas increase will be about 10,000 tons. The overseas increase mainly comes from the gradual recovery of mines in Australia and Myanmar, and the overall increase in US.