By Michael Montgomery-Exclusive to
Rare Earth Investing News
The power that China holds over the rare earth market is well
documented. They produce over 95 percent of rare earth oxides
worldwide, and their trade practices have sent the prices for the
elements through the roof.
This monopoly and market control has created a wave of
investment interest in junior miners with rare earth
The shortages of the minerals have prompted the US and
European governments to develop strategies for the secure supply
of the metals needed for high tech and military applications.
Recently, government officials in the UK and Europe held hearings
over the strategic importance of rare earths. Trying to develop
strategies for securing supplies of the metals has proven
Recycling of rare earths has been thrown around as partial
solution. Japanese tech firms have discussed 'urban mining' as a
way to get rare earths from discarded e-waste. However, in the
recent UK hearing over strategic minerals the British Metals
Recycling Association (
) spoke about the complexities of recycling.
"Some are claiming the U.K. should protect its position
strategically, recycling them within Europe and not exporting
them… The widespread use of these metals is a relatively recent
phenomenon, and so there is not a significant amount recovered
through [Waste Electrical and Electronic Equipment] recycling.
Currently, recovering these materials can be costly and only
produces very small quantities, making it uneconomical," stated
, BMRA's director general.
The BMRA added that there is little incentive to invest in
developing recyling methods for rare earths. However, Mr.
Hetherington added, "This situation is likely to change over the
next ten years."
The European Union is also trying to devise their own
strategy. The European Commission is hoping for industry to start
recycling and stockpiling rare earths, which may dampen high
prices and alleviate supply shortages.
"The commission is investing 17 million euros ($23 million)
for research into improving underground technologies and the
substitution of some rare earths. It also hopes to improve
recycling of electronic and car parts that contain rare earths,"
The New York Times
The need for recycling could be more economically viable if
the true costs of extraction, with the added costs to the
environment, are added into the equation. Prices for rare earths
were held down for a decade as China's lax environmental policies
made the extraction of the minerals artificially low. With China
now trying to tackle the environmental degradation caused by
their rush corner the market, prices have risen to account.
The change in the status of China from a net exporter to net
importer of rare earths may have an effect on pricing. Just as
, when China becomes a net importer of minerals in which they
dominate, prices rise dramatically. Recently the head of the
Chinese Society of Rare Earths stated that China will become a
net importer of rare earths, citing domestic consumption as a
"(There are) early signals that China is moving from sell-side
to buy-side. China becomes a new market opportunity for producers
outside China," stated
, director of the Chinese Society of Rare Earths.
What could push prices even higher is the creation of a
Chinese national strategic stockpile of rare earths. There have
been numerous rumors over whether or not this stockpile would be
created, and over the last few days the rumors have morphed
"The reports say storage facilities built in recent months in
the Chinese province of Inner Mongolia can hold more than the
39,813 metric tons China exported last year… Chinese state media
reports say stockpiles may eventually top 100,000 metric tons,"
James T. Areddy
, for The Wall Street Journal.
The stockpiling of these minerals may mean a few things.
Firstly, a further reduction to export quotas may be coming. This
is tempered by China's crackdown on
in the country which skews export totals. If the previously
illegally mined rare earths are diverted to the stockpile the
outcome may be a net push in terms of exports.
Secondly, if China does start building a large stockpile of
rare earths, they may have to import rare earths to feed the
stockpile and their own domestic consumption. This new demand may
be a factor in the Chinese Society of Rare Earths predictions of
China becoming a net importer. The supply chain for rare earths
is tight, and the increased demand for the invaluable minerals
will only squeeze the supplies even tighter until new non-Chinese
mines are at full production.
Governments Discuss Strategic Minerals Policy as Rare
Earth Supply Chain Tightens
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