Report examines Chinese- dominated rare earth industry

A new study issued by London-based information service Roskill, looks at China’s powerful position as the dominant global supplier of rare earth metals and yttrium.

The report examines how China’s strict control over mining, production and export of these metals has put Western countries in a chokehold.

Entitled The Economics of Rare Earths and Yttrium, the study reviews the fundamental changes the past three years have brought to the global industry, taking it from oversupply to demand shortages.

During the 1990s and early 2000s, significant over-production and low prices led most non-Chinese rare earth producers to shut down their operations. As a result, from 2004-2007, China has supplied 90-95% of global demand. Now, with reduced exports from China and continued growth in demand elsewhere, the supply-demand mismatch is causing great concern to other countries, which are anxious to support new sources of rare earth elements.

With high prospects for growth in rare earth end-use sectors, and forecast demand growth of 8-11% per year, there is a pressing need for new non-Chinese capacity in the next three to four years. This has focused attention on the reopening of Molycorp’s Mountain Pass operation in California, expected increased production of loparite from Russia’s Kola Peninsula, Lynas Corp.’s plans to process Mount Weld ore in Australia, and other potential sources, such as Arafura Resources’ Nolans project in Australia, Great Western Minerals Group’s Hoidas Lake property in Saskatchewan, and Avalon Ventures’ Thor Lake project in the Northwest Territories.

On the basis that China will adhere to announced production limits, there is a real prospect that within 5-10 years, the country will be just meeting its domestic needs, further constraining supply. To meet the estimated global demand of 180,000-190,000 tonnes rare earth oxide in 2010, around 40,000 tonnes of new capacity will be needed to meet the unfulfilled demand from outside of China.

— The preceding is an edited version of a synopsis of the report, found at www.roskill.com.