Absco Materials



Cerac Inc


Rare Earths Market 

Over the last few months there has been much written about rare earths with articles even appearing in the national press.  This has all come about because China, the world's largest provider of rare earths, drastically cut back on the quantity it would allow to be exported in the second half of 2010.  This has led to a scramble for rare earths from all over the globe with a resultant dramatic increase in price.
Perhaps we can start by giving some background information:
  • The rare earths (or lanthanides) are a group of chemically similar elements which have some unique properties and are used in a wide range of technically advanced applications including autocatalysts, magnet alloys, magnesium alloys, phosphors, batteries for electric vehicles, glass polishing, technical ceramics, iron and steel production and the nuclear industry.
  • Rare earths have traditionally been split into 2 groups: "light" rare earths (La, Ce, Pr, Nd, Sm) and "heavy" rare earths (Y, Eu, Gd, Tb, Dy, Ho, Er, Tm, Yb, Lu).  The light rare earths are more plentiful, are more widely distributed and account for more than 90% of production.  However, certain of the heavy rare earths such as Y, Tb and Dy are essential in certain applications.  The natural abundance of the individual rare earths is not in line with demand.
  • Significant reserves of rare earths outside China exist in the USA, Russia, Australia, India, Canada, Southern Africa, Vietnam, Brazil and Greenland.
  • Expansion of the Chinese rare earth industry from the late 1900s until recently led to abundant and cheap rare earths, effectively preventing non-Chinese suppliers from operating profitably.
  • Only China in recent years has invested in mining and separation technology and now accounts for around 97% of the world output.  The remaining production is mainly from the USA, India, Estonia, Kazakhstan and Vietnam.
  • Even though China removed their export subsidies and imposed export taxes and quotas, no significant uplift in prices occurred until 2010.  Export quotas were steadily reduced from ~66,000 tonnes in 2005 to ~50,000 tonnes in 2009.
The Current Situation:
  • It is estimated that China wil produce ~110,000 tonnes in 2010.
  • Of this, ~30,000 tonnes will be allowed to be exported under the existing quota, a reduction of ~40% on the previous year, but  with a severe and unpredicted reduction to only ~8,000 tonnes in the second half of 2010.
  • China is set to announce the quota allocation for 2011 in January.  Traditionally, they have only released figures for the first half of the year at that point.  Indications are that the level of export quota for 2011 will be similar, or slightly reduced, from that in 2010.  This still has to be confirmed.
  • In conjunction with our partners we are striving to maintain supplies to our UK customers and will only offer material if we can be 100% sure of being able to deliver.
The near term future (up to 2015)
This information has been acquired from a number of sources and is the best estimate of what is likely to happen in the next few years.  No individual companies are named as additional information can be readily found on the internet.
  • China will continue to be the main source of all rare earths and will also become an increasingly dominant end user.  Predictions are that world demand for rare earths will increase by ~12% and that China's growth in demand will be more than this.  This will lead to the quantities available for export from China being reduced in relative and possibly absolute terms.
  • The other existing suppliers will increase their production, perhaps to around 7,000-10,000 tonnes per year in total.
  • There are likely to be 3 new or resurrected suppliers producing rare earths outside China:
    • An Australian/Malaysian project scheduled to come on stream at the end of 2011 with an estimated 11,000 tonnes or rare earth production per year increasing to ~22,000 tonnes by the end of this period.
    • A previous rare earth facility in the USA is being recommissioned to produce 20,000 tonnes per year by the end of this period.
    • A Canadian/South African project is planned to come on stream in this period with the prime aim of producing samarium and neodymium for their own internal use.
    • All of the above non-Chinese planned production will be predominantly light rare earths leaving China as still the virtual sole supplier of heavy rare earths.
Longer Term (after 2015)
  • There are many (>200) deposits that have been identified as containing rare earths worldwide.  The vast majority of these will never make it to any form of production and will only serve as a short term stock market investment opportunity/risk.
  • There are several more serious projects, mainly in Australia, Canada, the USA and possibly Greenland where the deposits contain heavy rare earths and may be viable.
  • After 2015, if the 3 major projects above go ahead as planned, it is unlikely that any additional producer will be able to operate profitably by producing light rare earths alone.
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