Rare earth: a new Chinese giant

The Chinese authorities have led to the creation of a new state-owned rare-earth company combining the activities of Ganzhou Rare Earth Mineral Industry Company, and a number of smaller local companies including Longnan Wanbao Rare Earth.

The red clay hills of Ganzhou in Jiangxi are home to an estimated 36 per cent of China’s rare earth reserves, and China provides about 95 per cent of the world’s rare earth shipments. Now the only company in the area, Ganzhou Rare Earth Group will be present at all stages of the rare earth production process: mining, smelting, separation and trading. “From now on, Ganzhou will step up efforts to facilitate the merging and restructuring of the rare earth industry,” said Liu Jianping, vice mayor of Ganzhou.

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China will subsidize its rare-earths producers

The Chinese government continues to restructure and modernize its rare-earths industry. In a move that Beijing describes as “promoting orderly development”, it will provide direct subsidies to revive struggling rare-earths producers – a tacit acknowledgment of the strategic importance of the industry.

We mentioned in a previous article that prices of rare-earths minerals were succumbing to gravity. The explosion of the bubble, which saw the price of rare earths to increase six-fold between June 2010 and June 2011, has reduced prices to such a level that the two major Chinese producers have decided to temporarily stop their activity. Soaring prices led new projects and also motivated consuming industries to find alternatives. While consumer countries denounced China before the WTO for reducing its export quotas, Chinese sales of rare earths have fallen 30% in 2012 to 11 000 tonnes.

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Prices of Rare-Earths Minerals Succumb to Gravity

“Overnight there were 200 companies suddenly marketing rare earths, from just five in 2009,” he said. “While large projects like Lynas‘s will still be viable, smaller projects will struggle, and a lot of those 200 companies will go away again.”

“In the light rare earths market, supply growth is plentiful and there is an immediate concern about what that supply does to pricing,” said Tim Schroeders, a fund manager at Melbourne-based Pengana Capital.

Some rare earths are falling out of favor faster than others. A kilogram of lanthanum oxide—used in oil refining and hybrid vehicles—now fetches just US$13 a kilo, compared with an average US$104 a kilo last year.

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Rare earths: China counter-attacks

In response to the case filed with the WTO by its trading partners, the United States, European Union and Japan, China’s State Council on Wednesday issued its first white paper on the controversial rare-earth metal sector .

Before the case actually goes in litigation at the WTO, China wants to justify its export quotas for rare earths, which have multiplied some of those metal prices by 10 times in the past 2 years. In its White Paper, the Chinese government explains its desire to consolidate an industry with a multitude of small companies not only extracting the rare earths materials, but also proceeding to their separation in appalling conditions for human safety and the environment.

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Rare earths give China immense (and worrisome) influence (3/3): Rare earths demand

In this particular context of Chinese quasi-monopoly, the risk of an economic disaster is likely if this supply was to be put to the test. And this is precisely what has been happening for several years, and more explicitly since 2010.

Indeed, China has the will to move its workforce skills from upstream to downstream of many industrial sectors, and consequently has moved its rare earths production from simple mineral concentrates to industrial components such the magnets and phosphors to today finished products (computers, electric motors, mobile phones). Also, since 2007 it has protected its lanthanides domestic supply.

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Rare earths give China immense (and worrisome) influence (2/3): Rare earths production

To understand the stakes related to rare earths, we must address the myth of their rarity. Indeed, they are all more abundant than gold or silver in the earth’s crust, and their name actually reflects a relative rarity in minerals in which they are present (that is to say in low concentrations).

For example, lanthanides can be found in over 200 minerals, but only five of them have sufficient concentrations to be economically viable.

The U.S. Geological Survey (USGS) estimates world reserves to be around 114 million tonnes, i.e. more than 800 years of consumption if the level of current demand is maintained. These reserves are spread between China (48%), CIS (17%), the U.S. (11%), India (3%) and Australia (1.4%). The remaining 19% are divided between Canada, Greenland, Malaysia, Brazil, South Africa, Malawi, Vietnam, Thailand, Indonesia and a handful of other countries.

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Rare earths give China immense (and worrisome) influence (1/3): Rare earths usage

The stakes are significant: the rare earth elements have become key industries in developed countries, actors essentials of a multitude of industrial products, including applications designed to have their claims explode over the coming years, such as electric cars and wind turbines.

The supply of these precious minerals is highly constrained due to an incredible concentration in China, there will be no longer enough to satisfy everyone. And as China’s high-tech industries grow, supply issues will likely get only worse.

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Rare Earths: China Sets Up Industry Association‎

The Chinese government announced Monday the creation of an association of producers of rare earths, while being criticized by its trading partners for export restrictions of these essential minerals in high technology.

The USA, EU and Japan have complained to the World Trade Organization last month, arguing that the Chinese industry sector sought to use its position of near monopoly.

China alone extracted more than 95% of rare earth on the planet.This is a group of 17 minerals possessing chemical and electromagnetic relatives, among others used to make computers, monitors, audio equipment, cameras and cameras, automotive parts, batteries or bulbs.

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Five Rare Earths Crucial for Clean Energy Seen in Short Supply

Limited supplies of five rare-earth minerals pose a threat to increasing use of clean-energy technologies such as wind turbines and solar panels, a U.S. Energy Department report found.

The substances — dysprosium, terbium, europium, neodymium and yttrium — face potential shortages until 2015, according to the report, which reiterates concerns identified in a report a year ago.

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Rare Earths Fall as Toyota Uses Alternatives

Declines in August and September pared a five-month, fourfold surge that brought the average price for eight of the most widely used rare-earth oxides to a record 396,850 yuan ($62,068) a metric ton in July, data from consultant Shanghai Steelhome Information show. The average price declined 13 percent from its July peak as of Sept. 27.

Rare-earth prices are set to extend their decline from records this year as buyers including Toyota Motor Corp. and General Electric Co. scale back using the materials in their cars and windmills.

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