China’s Biggest Rare Earths Producer Extends Production Suspension to Another Month

China's biggest rare earths producer, Baotou Steel Rare-Earth (Group) Hi-Tech, declared middle of this week it will continue to extend its self-imposed production suspension of firing, smelting and separating of rare earths to another month, spurred by the continued dropping prices of the precious commodities in the world market.

The company started the suspension in October, which included factories in the northern region of Inner Mongolia as well as two in the eastern province of Jiangxi.

"The rare earth market recovered slightly in the two months when production . . . was suspended. But there has been no fundamental turnaround," it said in a statement filed with the Shanghai bourse. The Chinese rare earths mining firm contributes half of the world's output of light rare earths.

In announcing the suspension in late October, Baotou Steel explained it was needed so as to help stabilise prices of rare earths in the world market against the backdrop of a global fiscal crisis.

Industry analysts, on the other hand, said the suspension was the company's last resort drastic action to the prevailing oversupply of rare earths in the global market, especially moreso that Baotou Steel had reached its production guidance for the year.

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Rare earths are 17 elements used to manufacture a number of essential technological products such as iPads, wind turbines, missile systems and hybrid cars, to name a few.

Producers of rare earths enjoyed an immensely rich harvest when prices soared since 2009 due to advancements in the world's application of technological knowledge.

However, an oversupply in the world market rendered prices to fall.

This is not the first time that Baotou Steel made a self-imposed production suspension. The first was in October 2011.