The Chinese government has been keeping a closer eye on the rare-earth metals industry, and on 28 April 2026 they published a detailed list of penalties for breaking state quotas. Companies can be fined up to 10 times the amount of illegal profits made and even have their operations suspended for producing things without permission. These measures are all about making it easier for Beijing to “total control” the sector, which has become a way to exert influence in the trade standoff with the U.S. Against the backdrop of this news and rising prices for key elements (in particular, neodymium-praseodymium oxide), shares of leading Chinese mining companies went up by 8–10%.
The Chinese government has announced plans to penalise companies for the illegal mining of rare earth metals beyond the established quotas. Shares in Chinese companies mining critical minerals went up by 8–10% thanks to strong financial results and the government’s announced plans. Bloomberg says that the big rise in producers’ profits is mostly down to much higher prices for the main rare earth elements in the early months of this year.
The price of neodymium-praseodymium oxide—a key benchmark for the sector, as it’s the main ingredient in magnets—hit its highest point since 2022 in February, passing $150 per kilogram.
Chinese rare earth metal producers had a rough year after they found themselves right in the middle of the trade conflict between the U.S. and China. Like their foreign buyers, they had to adapt to export controls and other tightened regulatory measures imposed by Beijing to strengthen its grip on the sector.
On April 28, the government released a detailed list of penalties for unauthorised production, which is just another attempt to strengthen Beijing’s “total control” over this industry, which is important for geopolitics. If you’re found to have broken any of these rules, we’ll look into it:
- Exceeding production quotas
- Mining or processing without a licence
- Obstructing the work of inspectors
Penalties for rare earth metals in China
If you exceed your quota by less than 10%, you might get a fine of up to five times the amount of illegal profits. But if you exceed your quota by more than 30%, you could be looking at a fine of up to 10 times the amount of profits, as well as having your operations suspended. If you don’t upload the required information to the government tracking system, you’ll be fined up to 200,000 yuan ($29,256) or up to 1,000,000 yuan if the company refuses to rectify the omission.
The latest penalties for illegal activities are based on rules China brought in last August. They’ve also made it more strict, like by asking for regular reports on sales, production, and procurement to the central government every month.
China’s got the upper hand in the rare earth metals market, so it’ll be pretty hard for President Trump and Chinese leader Xi Jinping to make a deal when they meet next month.
Bloomberg says that about $1.4 trillion of the U.S. economy is linked to industries that use these minerals. This gives Beijing a big reason to keep its producers under tight control.