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In response to increased criticism, China has set up a rare earth industry association in a move to speed up unification of its diverse rare earth industry.
By Adam Currie — Exclusive to Rare Earth Investing News
China recently announced that it has set up a rare earth association to speed up the unification of the diverse industry, which has drawn criticism from what many overseas trade partners are calling unfair export quotas.
According to the state-run Xinhua news agency, the association will consist of 155 members across the country, and will report to the Ministry of Industry and Information Technology, which is currently responsible for regulating rare earth production.
“Shake up the industry”
Su Bo, an industry vice minister, announced that the move was made because Beijing wants to “shake up the industry” by phasing out smaller-scale smelters, giving large players a greater stake in the supply of rare earth metals and in turn boosting environmental protection.
“China will continue to clean up the rare earth industry, expand rare earth environmental controls, strengthen environmental checks, and implement stricter rare earth environmental policies,” said Bo.
Less than a month ago, the already tense US-China relationship took a new turn as the US, EU, and Japan moved in on the World Trade Organization (WTO) to challenge China’s restrictive rare earth export policies.
Some speculators argue that China’s goal is to create the ultimate monopoly by driving up export costs to the point that technology manufacturers are forced to relocate their facilities to the People’s Republic.
It was also announced that Gan Yong, the President of the Chinese Society of Rare Earths, will be president of the new association. He claimed that the body will help to “form a reasonable price mechanism” at a time when China is being accused of deliberately forcing up prices by minimizing exports.
Molycorp updates resource estimate
Meanwhile, Molycorp Inc. (NYSE:MCP), one of the only non-Chinese producers of rare earth, has raised its estimates of reserves contained at its California mine.
According to a company press release, a new independent study has confirmed that its Mountain Pass mine contains 36 percent more probable or proven reserves than originally estimated. It now estimates reserves at 2.94 billion pounds of contained rare earth oxide equivalent, compared with a previous estimate of 2.24 billion pounds.
The updated analysis is influential in that it means that Molycorp’s total proven and probable reserves now add up to approximately eleven times the current global demand of 120,000 tonnes a year, most of which is supplied by Chinese producers. The company has stated that it expects output at the mine to reach its phase one annual rate target of 19,050 tonnes by the end of the third quarter of 2012.
From a market competitiveness perspective, the updated estimate comes at an ideal time for Molycorp as the miner’s closest competitor outside of China, Australia’s Lynas Corporation Ltd. (ASX:LYC), is facing numerous permitting delays at its processing facility in Malaysia.
Market price update
It has been an active week for rare earth prices as lanthanum/cerium mischmetal prices rose on the back of an improvement in downstream demand and a rise in raw material prices.
Market sources confirmed that prices for lanthanum/cerium mischmetal (La 35 percent, Ce 65 percent) moved up to trade around RMB85,000/tonne in comparison to RMB80,000/tonne a week ago.
An unnamed source at a Chinese-based producer was quoted in the media as saying that “[m]ore downstream consumers have been tending to buy mischmetal recently and sales for the material have been running.”
He added that an increase in lanthanum/cerium chloride prices has also contributed to the rise in lanthanum/cerium mischmetal prices. Prices for lanthanum/cerium chloride (La 35 percent, Ce 65 percent) are currently holding at RMB22,000/tonne, up from RMB18,000 to 20,000/tonne a week ago.
Dysprosium oxide prices saw no change last week, closing the trading at RMB4,300 to RMB4,600 per kilogram. Samarium prices also remained flat throughout last week at RMB270,000/tonne, while gadolinium maintained its pricing at RMB178,000 per metric tonne.
Junior mining news
Quantum Rare Earth Developments Corp. (TSXV:QRE) CEO Peter Dickie noted in an interview that based on an updated resource estimate, Quantum’s Elk Creek, Nebraska niobium project could cut US dependence on imports of the strategic material.
He also said that the project contains one of North America’s largest undeveloped niobium deposits in terms of grade and tonnage, and is the only primary niobium deposit under development in the US.
The updated estimate shows a resource containing over 129,000 tonnes of niobium (Nb2O5) in the indicated category, and over 524,000 tonnes of niobium (Nb2O5) in the inferred category, with the deposit open in three directions.
Great Western Minerals Group Ltd. (TSXV:GWG) announced that it is on track for its strategy of becoming a fully-integrated rare earth producer and processor.
The rare earth focused company has several operational targets this year, including the refurbishment of the mine shaft at the Steenkampskraal mine in South Africa and the completion of the NI 43-101 report for the mine by mid-May.
The company recently unveiled assay results from the first batch of samples taken as part of the phase one program at Steenkampskraal. Within the underground channel sampling results, assays ranged from 15.9 percent total rare earth oxide (TREO) to 40.12 percent TREO with an average of 23.75 percent TREO.
Drill core assays ranged from 0.18 percent TREO to 31.07 percent TREO, with an average grade of 13.83 percent TREO. Surface tailings results from the first batch of 54 assays ranged from 3.85 percent TREO to 12.01 percent TREO with an average of 7.27 percent TREO.
The remaining results from the phase one program will continue to be released over the next few weeks.
Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.