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As the investigation into rare earth quotas heats up, more and more countries are seeking to take advantage of supplies and alliances to increase their rare earth competitiveness.
By Adam Currie — Exclusive to Rare Earth Investing News
It was another eventful week for the rare earth market, with China publicly responding to allegations of manipulating market prices through strict export quotas.
China responded by suggesting that its steps to regulate the industry are in line with the World Trade Organization‘s rules and are meant to protect the environment.
In a public address, Zhu Hongren, chief engineer of the Ministry of Industry and Information Technology said, “[a]ll these measures, such as export quota controls, are meant to diminish environmental risks that have resulted from the disorderly development of the rare-earth industry.” He added that not regulating the sector will bring more harm to the environment.
Following the announcement that automobile manufacturer Honda (NYSE:HMC) has teamed up with a partner to develop the world’s first mass-production rare earth recycling process, administrators announced that Japan will be jointly developing rare earth elements (REEs) with Kazakhstan as part of its efforts to secure supplies of key minerals.
According to Reuters, Tokyo plans to sign an accord when Yukio Edano, the Japanese Minister of Economy, Trade and Industry, visits the Central Asian country next month.
The source stated that under the plan Japan and Kazakhstan will jointly build a plant in Northern Kazakhstan to produce dysprosium, a rare earth used in the construction of engines for electric and hybrid vehicles, as well as other electronic products.
The report added that companies to be involved in the project include Sumitomo Corp. (TYO:8053), Japan Oil, Gas and Metals National Corp., and Shin-Etsu Chemical Co. Ltd. (TYO:4063).
“Political leverage and influence”
Earlier this week the Canadian Chamber of Commerce released a report suggesting that Canada’s REE resources could give the nation increased “political leverage and influence” in the search for rare earth outside of China.
In the report, titled “Canadian Rare Earth Deposits Can Offer a Substantial Competitive Advance,” the Chamber suggested that the time is right for “Canada to start punching above its weight in leveraging what is often referred to as the ‘oil of the 21st century.'”
Chamber CEO Perrin Beatty commented, “Canada has 1.1 billion pounds of rare earths locked in black shale deposits…worth an estimated $206 billion. In addition, several other Canadian mines across the country show great potential.”
“We have been blessed with great geology and we have a tremendous opportunity to turn out resource richness into a significant competitive advantage,” he added, before stressing that “[w]ith the Japanese, Americans and Europeans now searching for ways to counter China’s monopoly, Canada is in a very enviable position.”
Companies working together
Meanwhile Petrobras, Brazil’s state-run oil company, and mining giant Vale (NYSE:VALE) have reportedly been in discussions over a REE deal that would allow Vale to replace Chinese sources as Petrobras’ supplier of lanthanum oxide for oil refining.
According to a market report, Vale is seeking to secure a long-term supply contract from the oil major for approximately 900 tonnes of lanthanum oxide per year, which analysts claim could cut China out of the company’s supply chain.
Market price update
It has been a quiet week for rare earth, with lanthanum/cerium mischmetal prices remaining flat. Dysprosium prices are trading at between $1,050 and $1,070 per kilogram.
Rare earth metals consultant TRU Group Inc. announced that recent attempts by Chinese suppliers to halt the decline in REE prices are likely to fail even though the latest export data states that rare earth oxide (REO) prices strengthened to US $144,000 per tonne/REO – up significantly over the January figure.
“Predicting how far prices will fall and when price-stability will return to the market is complex,” said Edward Anderson, President of TRU.
“This is a small niche market, not a situation of supply-demand balance alone – even when this analysis is applied to an individual strategic rare earth such as neodymium, dysprosium or praseodymium. For one thing the supply shortages are artificial as they have been caused only by (reversible) Chinese Government market intervention.”
He said that western REE projects currently in the pipeline will not only alleviate supply shortages but will also have a direct effect on dragging down prices.
Junior mining news
Black Fire Minerals Ltd. (ASX:BFE) has received further rock chip and geochemical samples from the Longonjo rare earth prospect as the company prepares for an upcoming drill program.
Bedrock pit samples returned a peak result of 5.57% total REOs, including 1.17% neodymium oxide. The rock chip program returned the best sample to date, with 7.12% total REOs.
According to the company, results indicate the presence of extensive REE mineralization. A surface geochemical program in 2011 confirmed bedrock sources throughout the soil anomaly area, with a peak result of 18.96% total REOs in bedrock pit samples.
Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.