This post was originally published May 13, 2011
Rare Earth - the Evolving Drama
Recent world developments once
again surfaced the importance of rare earth commodities. The really tragic rare
earth market story is proficiently described in this presentation: Arafura Resources – On Track to Supply Rare Earths To
Users Worldwide in 2013
Another appealing graph is produced by the USGS: Global rare-earth-oxide production trends.
Source: China’s Rare-Earth Industry
Analyzing my
Blog Stats I have noticed that this entry is very popular with visitors
worldwide: Investing in Thorium: a Safe and Green Alternative to
Uranium. Thus, I am
re-posting my 15 months’ old blog posts (with
some 2011 updates) and in the
follow-up post I will make some present day summary.
The Rare Earth
market is not very prominent as compared to other commodities. However,
according to some analysts “it may prove to be the most geo-politically controversial
market in the future.” And once again, this is very tightly
associated with China. Just yesterday, the Chinese news mediaproudly reported: “China becomes rare earth heavyweight” - China is now the
world's largest producer, exporter, and consumer of rare earth resources.
In this blog post I would
attempt to briefly outline some issues of rare earth market.
What are the metals? This is a good presentation of Rare Earth from Rare Earth Elements
What are the metals? This is a good presentation of Rare Earth from Rare Earth Elements
This beautiful slide has a
good visualization:
By Wings Enterprises, Inc.
Another valuable source is Rare Earth Elements by Stephen B. Castor and James B. Hedrick that has very detailed description including world deposits, exploration and mining methods.
The situation with Rare Earth in the USA is analyzed in the report prepared by the Molycorp Minerlas, LLC. prepared for Congressional Leaders in January 2009
REPORT HIGHLIGHTS:
·
The global
market for rare earths consumed 126,682 metric tons of materials in 2008 and an
estimated 113,610 metric tons in 2009. This is expected to increase to 175,618
metric tons in 2014, for a compound annual growth rate (CAGR) of 9.1%.
·
Mechanical and
metallurgical applications have the largest share of the market and used 42,765
metric tons of materials in 2008. This is expected to decrease to 36,770 metric
tons in 2009 and increase to 56,410 metric tons in 2014, for a CAGR of 8.9%.
·
Glass and
ceramics applications have the second-largest market share, and used 34,730
metric tons in 2008 and an estimated 32,500 metric tons in 2009. This is
expected to increase at a CAGR of 8.5% to reach 48,890 metric tons in 2014.
China produces
90- 95% of World Rare Earth Elements (REE) supply. There is one producing North
American mine— Mountain Pass in California has been restarted. A very
interesting discussion on Rare Earth (including the new developments in
Greenland – that will probably will shake the market) is
hosted by Pure Asset Trader -- China's Mission: A Rare Earth Element Monopoly with
this citation:
China currently
produces 95% of the world’s rare earth output. A very detailed description of
China’s resources may be found at the China Mining web-site : “The available REE products encompass bastnaesite, ion type
REE ores and monazite. The productive capacity of REE concentrates is as high
as 80,000 tons and the output is higher than 50,000 tons. The total smelting
capacity of REE ores is over 100,000 tons a year (referring to REE oxides) and
the output reaches 40,000~50,000 tons. At present, there are more than 70
hydrometallurgical plants and they produce 300 varieties and 500 specifications
of REE products. The purity of a single REE oxide is 99%~99.9% in general and
that of batch REE products can be as high as 99.9%~99.999%. The quality of
products has come to the relevant national standards and can meet the demands of
the customers both from China and abroad.”
Chinese Ministry
of Industry and Information Technology released a draft plan entitled “Rare
Earths Industry Plan in 2009 – 2015” (REIP) – in order to restructure the rare
earth industry, eliminating many smaller mining enterprises and leaving the
industry with 20 big producers. The REIP would limit China’s annual production
to 130,000 to 150,000 tons and restrict exports. The Plan recommends limiting
Chinese exports to below 35,000 tons a year, and will prohibit export of
yttrium and heavy rare earths dysprosium, terbium, thullium and lutetium.
In September Reuters reported that China's sovereign wealth fund is mulling to
launch its own domestic rare earth firm. China Investment Corp (CIC) may do
this through Jianyin Investment, its wholly-owned domestic industrial
investment arm.
ARAFURA
RESOURCES LIMITED issued a press-release: China further tightens Rare Earth Production and Exports that has some good observations.
And I would also recommend
reading Rare Earth Elements and The China Factor – Again… from the SeekingAlpha.
Despite
optimistic views expressed in the cited above source on the Greenland REE opportunity - Displacing China as a
Rare Earth Producer is No Small Feat – as it is discussed in this video by Dudley Kingsnorth of Industrial Minerals Company of Australia Pty
Ltd, an expert in the field of Rare Earth metals. However, latest news reports
indicate that there is an upcoming shift in the REE market: China is turning
its policy in a direction that may greatly affect the whole world – form
providing supplies to the world industries to supplying internal ones. Thus,
the new resources may be vital – as the ones claimed by Greenland Minerals and Energy . The company posts on its Web-site this material: World faces hi-tech crunch as China eyes ban on rare metal
exports – worth to read.
More to come...
