* Mining quota at 132,000 T, smelting and separation at127,000 T
* Annual quotas for 2019 are highest volumes ever allocated
* Beijing had raised prospect of limiting supply in U.S.trade row
* Quotas have been released unusually late in the year (Adds analyst and association official comment, milestone)By Tom DalyBEIJING, Nov 8 (Reuters) - China lifted its annual rareearth output quotas on Friday by 10% to record-high levels for2019, potentially easing fears the world's dominant producer ofthe group of 17 prized minerals will restrict supply.Beijing in late May raised the prospect of weaponising itscontrol of rare earths, used in everything from consumerelectronics to sophisticated military equipment, in its tradewar with the United States but has yet to announce any formalrestrictions. China is home to at least 85% of global rare earthprocessing capacity, according to Adamas Intelligence. The full-year rare earth mining quota has been set at132,000 tonnes for 2019 and the smelting and separation quota at127,000 tonnes, the Ministry of Industry and InformationTechnology said in a statement.
The quotas, up from 120,000 tonnes and 115,000 tonnes,respectively, in 2018, are the "highest volume ever allocated"David Merriman, a London-based manager at commodity researchfirm Roskill, said in an email.China has now increased the allowances for two years in arow and an official at the Association of China Rare EarthIndustry confirmed the numbers were record highs.
They imply a quota of 72,000 tonnes for mining in the secondhalf of 2019, up more than 54% from an unusually low level ayear earlier.
For smelting and separation, or the processing of ore intomaterial manufacturers can use, the second half quota is 69,500tonnes.
The quota hikes could be seen as a message that China has"the capability to increase supply, making life difficult for(rare earths) under development in regions such as the Americas,EU and Australia," Roskill's Merriman said.But it likely "has much more to do with the domestic Chinesesupply-chain situation," he added, noting that China had beenincreasingly looking overseas for feedstock amid anenvironmental crackdown at home.The move will allow state-run miners and processors to"legally maintain market share," Merriman said. China typically issues the rare earth quotas twice a yearfor six-month periods. In March, the first-half quotas were setat 60,000 tonnes for mining and 57,500 tonnes for smelting andseparation. The late release of the full-year quotas comes as Beijingand Washington work to iron out the details on a so-called"phase one" deal to end trade hostilities. China's rare earth exports in October rose by 1.9% from theprevious month to 3,639 tonnes, according to customs datareleased earlier on Friday. (Reporting by Tom Daly; Editing by Louise Heavens and SusanFenton)
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