China Mining Weekly: Policy Shifts to Precision Regulation, Highlighting Value of Lithium, Rare Earths, and Strategic Minerals

Bottom Line

This week's policy signals are dense: China's rare earth exports have shifted from blanket controls to precision licensing, the State Council emphasizes strategic mineral supply security, coupled with lithium price strength and coal-fired power supply assurance expectations. Investors should increase allocations to lithium, rare earth upstream, and smart mine equipment targets, reduce excessive chasing of traditional coal stocks, and monitor the phased support for coal prices from the summer energy supply assurance pace.

Key Developments

1. Rare Earth Export Controls Shift to Precision Licensing, Strategic Mineral Regulation Path Clarified — China officially issued the first batch of simplified rare earth export licenses, marking a transition from blanket controls to targeted regulation, aiming to improve oversight of the critical minerals industry, after previous controls triggered supply chain disruptions. Portfolio Implications: Policy uncertainty in the rare earth sector has decreased, with clear benefits for leading mining companies and magnet exporters; it is recommended to overweight medium- and heavy rare earth targets with overseas mining capabilities.

2. State Council Explicitly Opposes 'No-Mine County' Performance Metrics, Strengthens Strategic Mineral Exploration Assurance — Reports indicate that some regions have overly emphasized restrictive policies in mining governance, leading to insufficient exploration and development of strategic minerals; the State Council requires strengthening strategic mineral supply security and promoting exploration breakthroughs. Portfolio Implications: Policy correction benefits domestic exploration companies and mine service providers; focus on tracking new project approvals for strategic minerals such as lithium, copper, and uranium.

3. Lithium Price Returns to 175,000 Yuan/Ton, Guangzhou Futures Exchange Main Contract Continues to Strengthen — On June 12, lithium carbonate futures closed at 175,300 yuan/ton (approximately $25,900/ton), with incremental market demand continuing to release and a tight supply-demand balance persisting. Portfolio Implications: Lithium resources remain in a tight balance in the short term, with high profit elasticity for upstream mining companies; it is recommended to hold companies with low-cost lithium mine production capacity, while being cautious of price corrections after new capacity comes online in the second half of the year.

4. Zijin Mining and Naipu Mining Machinery Sign Three-Year Strategic Cooperation Agreement — Naipu Mining Machinery, as a mining equipment manufacturer, signed an agreement with Zijin Mining covering product procurement and overseas project coordination, valid until May 2029. Portfolio Implications: Zijin Mining's expansion pace is confirmed, driving stable growth in upstream equipment demand; focus on wear-resistant materials and mineral processing equipment suppliers with long-term cooperation with Zijin.

5. Intelligent Green Construction of Anshan West Anshan Iron Mine Accelerates, Domestic Underground Equipment Achieves Breakthrough — People's Daily reported on the progress of deep underground construction at the West Anshan Iron Mine, with the project using domestically produced underground mining equipment, advancing in high-temperature and high-humidity environments. Portfolio Implications: The substitution space for domestic mining equipment further opens; mid-to-high-end mining machinery companies (such as unmanned mining systems and deep-well ventilation and cooling equipment) will benefit from strategic mine construction orders.

Sector Pulse

Risk Watch

• Implementation Progress of New Rare Earth Export Rules Falls Short of Expectations — After the issuance of the first batch of simplified licenses, if the actual approval process remains complex or quota allocation is opaque, short-term supply chain mismatches may occur. Probability: Medium. Impact: High.

• Summer Energy Supply Assurance Pressure May Lead to Phased Coal Price Overheating — China Coal Energy Group has held a supply assurance meeting, but if high temperatures exceed expectations, rapid coal price increases may trigger regulatory upgrades, causing sharp volatility in the coal sector. Probability: Medium. Impact: Medium.

• Concentrated Release of New Lithium Mine Capacity Exceeds Expectations — Although the current supply-demand balance is tight, if the global lithium framework of companies like Zijin Mining (planned annual production of 300,000 tons of lithium carbonate equivalent) accelerates implementation, it may break the balance prematurely. Probability: Low. Impact: Medium.

Outlook

Key Events and Data to Watch Next Week:

• Price changes and open interest of the main lithium carbonate contract on the Guangzhou Futures Exchange.
• Implementation details of specific measures for China Coal Energy Group's 2026 summer supply assurance.
• Construction progress of the West Anshan Iron Mine underground project and subsequent order announcements for domestic equipment.
• Issuance of the second batch of rare earth export licenses and related company feedback.

Positioning Recommendations: In the short term, maintain overweight positions in lithium resources and rare earth sectors, appropriately reduce coal stock profit positions, and wait for verification of summer supply assurance demand before making additional allocation decisions.