World Concerns Over Rare Earth Metal Supply After China Restrictions Options

[marchpole]

World concerns over rare earth metal supply after China restrictions
2009-09-05 18:40 BJT

http://english.cctv.com/program/newshour/2...05/104795.shtml

China says it plans to restrict exports of rare earth metals, and build a strategic reserve of the valuable minerals. But this decision by the world's largest producer of rare earth metals has sparked global concerns. Let's check out some global reactions.

The Daily Telegraph has reported that China's decision could cause a crisis for high-tech development. The UK newspaper says global energy competition has entered a new stage, claiming this is because nations are already experiencing difficulties in acquiring rare raw materials.

The US News and World Reports says the US relies on the Chinese exports for new energy uses. Export restrictions on the metal elements could cause fuel refineries to cut production, triggering a new nation-wide energy shortage.

Meanwhile, the Times worries that China's plans could lead to a global supply short-fall, adding that the monopoly of rare earth metals is unimaginable for Western nations.

But developed nations have hardly mentioned the benefits they have won from China's willingness to tolerate the Western world's environmental abuses. Many countries, like the US, have already built their own rare metal reserves. They use imports to protect their mineral reserves. The US is the world's second largest rare earth metals holder, accounting for nearly 12 percent of worldwide stocks. But it began halting production in 1999 for strategic and environmental concerns.

Australia and Canada are also tightening the mining of rare earth metals, and importing from China for mineral reserves.

South Korea and Japan nearly import all rare earth elements from China. The minerals are used in one third of Japan's industrial sector, and the country has on reserve two thirds of its annual imports for strategic proposes.

[marchpole]

(IMG:http://graphics8.nytimes.com/images/2009/09/01/business/01minerals_190a.jpg)
China is cutting exports of elements like
terbium, pressuring manufacturers to
open factories there.

(IMG:http://graphics8.nytimes.com/images/2009/08/31/business/mineral_graphic190.jpg)
Rare Wealth

(IMG:http://graphics8.nytimes.com/images/2009/09/01/business/01minerals2_190.jpg)
Toyota’s Prius hybrids use several
pounds of neodymium, a rare earth, in
their electric motors.



China Tightens Grip on Rare Minerals
By KEITH BRADSHER
August 31, 2009

http://www.nytimes.com/2009/09/01/business...amp;_r=1&em

HONG KONG — China is set to tighten its hammerlock on the market for some of the world’s most obscure but valuable minerals.

China currently accounts for 93 percent of production of so-called rare earth elements — and more than 99 percent of the output for two of these elements, dysprosium and terbium, vital for a wide range of green energy technologies and military applications like missiles.

Deng Xiaoping once observed that the Mideast had oil, but China had rare earth elements. As the Organization of the Petroleum Exporting Countries has done with oil, China is now starting to flex its muscle.

Even tighter limits on production and exports, part of a plan from the Ministry of Industry and Information Technology, would ensure China has the supply for its own technological and economic needs, and force more manufacturers to make their wares here in order to have access to the minerals.

In each of the last three years, China has reduced the amount of rare earths that can be exported. This year’s export quotas are on track to be the smallest yet. But what is really starting to alarm Western governments and multinationals alike is the possibility that exports will be further restricted.

Chinese officials will almost certainly be pressed to address the issue at a conference Thursday in Beijing. What they say could influence whether Australian regulators next week approve a deal by a Chinese company to acquire a majority stake in Australia’s main rare-earth mine.

The detention of executives from the British-Australian mining giant Rio Tinto has already increased tensions.

They sell for up to $300 a kilogram, or up to about $150 a pound for material like terbium, which is in particularly short supply. Dysprosium is $110 a kilo, or about $50 a pound. Less scare rare earth like neodymium sells for only a fraction of that.

(They are considerably less expensive than precious metals because despite the names, they are found in much higher quantities and much greater concentrations than precious metal.)

China’s Ministry of Industry and Information Technology has drafted a six-year plan for rare earth production and submitted it to the State Council, the equivalent of the cabinet, according to four mining industry officials who have discussed the plan with Chinese officials. A few, often contradictory, details of the plan have leaked out, but it appears to suggest tighter restrictions on exports, and strict curbs on environmentally damaging mines.

Beijing officials are forcing global manufacturers to move factories to China by limiting the availability of rare earths outside China. “Rare earth usage in China will be increasingly greater than exports,” said Zhang Peichen, the deputy director of the government-linked Baotou Rare Earth Research Institute.

Some of the minerals crucial to green technologies are extracted in China using methods that inflict serious damage on the local environment. China dominates global rare earth production partly because of its willingness until now to tolerate highly polluting, low-cost mining.

The ministry did not respond to repeated requests for comment in the last eight days. Jia Yinsong, a director general at the ministry, is to speak about China’s intentions Thursday at the Minor Metals and Rare Earths 2009 conference in Beijing.

Until spring, it seemed that China’s stranglehold on production of rare earths might weaken in the next three years — two Australian mines are opening with combined production equal to a quarter of global output.

But both companies developing mines — Lynas Corporation and smaller rival, Arafura Resources — lost their financing last winter because of the global financial crisis. Buyers deserted Lynas’s planned bond issue and Arafura’s initial public offering.

Mining companies wholly owned by the Chinese government swooped in last spring with the cash needed to finish the construction of both companies’ mines and ore processing factories. The Chinese companies reached agreements to buy 51.7 percent of Lynas and 25 percent of Arafura.

The Arafura deal has already been approved by Australian regulators and is subject to final approval by shareholders on Sept. 17. The regulators have postponed twice a decision on Lynas, and now face a deadline of next Monday to act.

Matthew James, an executive vice president of Lynas, said that the company’s would-be acquirer had agreed not to direct the day-to-day operations of the company, but would have four seats on an eight-member board.

Expectations of tightening Chinese restrictions have produced a surge in the last two weeks in the share prices of the few non-Chinese producers that are publicly traded. In addition to the two Australian mines, Avalon Rare Metals of Toronto is trying to open a mine in northwest Canada, and Molycorp Minerals is trying to reopen a mine in Mountain Pass, Calif.

Unocal used to own the Mountain Pass mine, which suspended mining in 2002 because of weak demand and a delay in an environmental review. State-owned Cnooc of China almost acquired the mine in 2005 with its unsuccessful bid for Unocal, which was bought instead by Chevron; Chinese buyers tried to persuade Chevron to sell the mine to them in 2007, but Chevron sold it to Molycorp Minerals, a private American group.

A single mine in Baotou, in China’s Inner Mongolia, produces half of the world’s rare earths. Much of the rest — particularly some of the rarest elements most needed for products from wind turbines to Prius cars — comes from small, often unlicensed mines in southern China.

China produces over 99 percent of dysprosium and terbium and 95 percent of neodymium. These are vital to many green energy technologies, including high-strength, lightweight magnets used in wind turbines, as well as military applications.

To get at the materials, powerful acid is pumped down bore holes. There it dissolves some of the rare earths, and the slurry is then pumped into leaky artificial ponds with earthen dams, according to mining specialists.

The Ministry of Industry and Information Technology has cut the country’s target output from rare earth mines by 8.1 percent this year and is forcing mergers of mining companies in a bid to improve technical standards, according to the government-controlled China Mining Association, a government-led trade group.

General Motors and the United States Air Force played leading roles in the development of rare-earth magnets. The magnets are still used in the electric motors that control the guidance vanes on the sides of missiles, said Jack Lifton, a chemist who helped develop some of the early magnets.

But demand is surging now because of wind turbines and hybrid vehicles.

The electric motor in a Prius requires 2 to 4 pounds of neodymium, said Dudley Kingsnorth, a consultant in Perth, Australia, whose compilations of rare earth mining and trade are the industry’s benchmark.

Mr. Lifton said that Toyota officials had expressed strong worry to him on Sunday about the availability of rare earths.

Toyota and General Motors, which plans to introduce the Chevrolet Volt next year with an electric motor that uses rare earths, both declined on Monday to comment.

Rick A. Lowden, a senior materials analyst at the Defense Department, told a Congressional subcommittee in July that his office was reviewing a growing number of questions about the availability of rare earths.

China is increasingly manufacturing high-performance electric motors, not just the magnets.

“The people who are making these products outside China are at a huge disadvantage, and that is why more and more of that manufacturing is moving to China," Mr. Kingsnorth said.

[marchpole]

Japan on alert over China’s plans to restrict metals exports
By Leo Lewis
August 28, 2009

http://business.timesonline.co.uk/tol/busi...icle6812818.ece

Japan is readying itself for a potential showdown with China at the World Trade Organisation as Beijing considers plans to strangle global supplies of rare earth metals — the “green” lanthanide metals used in hundreds of environmental and military technologies.

Global supply of the rare-earth metals, which are vital to the mechanisms of hybrid cars, wind turbines, iPods, lasers, super-efficient light bulbs and radar systems, is 95 per cent controlled by China.

The country’s dominance of the market is the result of a deliberate, 20-year bid by Beijing to cast itself as the “Opec of rare earth metals”. China’s apparent plans to tighten the leash on world lanthanide supplies come on the eve of a landmark decision by the Australian Government on the future of Lynas, one of its leading rare-earth mining companies. The Foreign Investment Review Board is debating whether to allow the state-owned China Non-Ferrous Metal Mining to buy a 51 per cent stake.

A senior member of Japan’s Rare Earth Metal Association observed that in a world before everyone had a mobile phone and wanted to drive fuelefficient cars, China’s rare earth monopoly was less meaningful — now it has created a dominance of globally strategic importance. Others, particularly those within the Japanese automotive sector, believe that the rare earth metals will become the centrepiece of numerous international trade wars.


China takes charge of keys to technologies' future


The document that has sent shockwaves through Japanese industry and government is a White Paper produced by the Chinese Ministry of Industry and Information Technology, which proposes an export ban on rare earth metals including the particularly critical dysprosium. Although the paper’s proposals, published only days ago, have yet to be acted on, the draft document has proved incendiary and spurred Sumitomo into accelerating a project in Kazakhstan to secure a non-Chinese supply.

The Chinese threat of an export ban on minerals critical to the modern world may end a phase of polite negotiation between Tokyo and Beijing on the issue. A senior Japanese official told The Times that if China does ban some rare earth metal exports by 2015, Japan may use the WTO to block such an action.

Chinese export quotas of rare earth metals fall below Japan’s demands, forcing even the largest consumers there to rely on smuggled material to meet about a quarter of their annual needs. A draft of the Chinese plan has been seen by senior executives at several of Japan’s largest trading houses and has sparked fears that China is aiming to step up dramatically its programme of quota reductions. Beijing has cut export quotas by about 6 per cent annually over the past decade. China’s rare earth monopoly arises from a combination of aggressive empire building by Beijing and long complacency on the part of the big consumers. The metals occur naturally in China, but Australia, the United States and South Africa all used to produce rare earth metals with a refining process that is dirty, mildly radioactive and expensive. It is widely believed in the industry that by skimping on costly clean-up provisions, China has been able to undercut all its competitors, forcing them out of business and earning itself its 95 per cent monopoly.

An attempt by China to further constrain — or ban — lanthanide exports would effectively force companies to re-open rare earth mines around the world or develop new ones. Sumitomo’s joint venture with Kazakhstan’s largest nuclear power company — revealed in The Times this month — is expected to unleash a land grab for rare earth mines in the former Soviet country. A Sumitomo spokesman said that the draft proposal from Beijing had “speeded-up our project there”.

But China is not keen to let its dominance slip. Lynas Corporation, an Australian miner, had been poised to open a new rare earth refinery project in Kuantan in Malaysia, which would eventually have met a large portion of demand from Japan and elsewhere. The credit crunch derailed Lynas’s funding plans for that project and has opened the door for China to step in with a bid that would give a state-owned company effective control of the Australian company. “Nobody else has come along with a deal on these terms,” a Lynas spokesman said.

[gnak]

indeed a valuable asset of china

a good move by the chinese government

rare metals used in high end technology... by controlling these resources limits technological expansion of rival nations

[marchpole]

World faces hi-tech crunch as China eyes ban on rare metal exports
By Ambrose Evans-Pritchard
Published: 5:58PM BST 24 Aug 2009

Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons.



A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tonnes a year, far below global needs.

China mines over 95pc of the world’s rare earth minerals, mostly in Inner Mongolia. The move to hoard reserves is the clearest sign to date that the global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price.

Alistair Stephens, from Australia’s rare metals group Arafura, said his contacts in China had been shown a copy of the draft -- `Rare Earths Industry Devlopment Plan 2009-2015’. Any decision will be made by China’s State Council.

“This isn’t about the China holding the world to ransom. They are saying we need these resources to develop our own economy and achieve energy efficiency, so go find your own supplies”, he said.

Mr Stephens said China had put global competitors out of business in the early 1990s by flooding the market, leading to the closure of the biggest US rare earth mine at Mountain Pass in California - now being revived by Molycorp Minerals.

New technologies have since increased the value and strategic importance of these metals, but it will take years for fresh supply to come on stream from deposits in Australia, North America, and South Africa. The rare earth family are hard to find, and harder to extract.

Mr Stephens said Arafura’s project in Western Australia produces terbium, which sells for $800,000 a tonne. It is a key ingredient in low-energy light-bulbs. China needs all the terbium it produces as the country switches wholesale from tungsten bulbs to the latest low-wattage bulbs that cut power costs by 40pc.

No replacement has been found for neodymium that enhances the power of magnets at high heat and is crucial for hard-disk drives, wind turbines, and the electric motors of hybrid cars. Each Toyota Prius uses 25 pounds of rare earth elements. Cerium and lanthanum are used in catalytic converters for diesel engines. Europium is used in lasers.

Blackberries, iPods, mobile phones, plams TVs, navigation systems, and air defence missiles all use a sprinkling of rare earth metals. They are used to filter viruses and bacteria from water, and cleaning up Sarin gas and VX nerve agents.

Arafura, Mountain Pass, and Lynas Corp in Australia, will be able to produce some 50,000 tonnes of rare earth metals by the mid-decade but that is not enough to meet surging world demand.

New uses are emerging all the time, and some promise quantum leaps in efficiency. The Tokyo Institute of Technology has made a breakthrough in superconductivity using rare earth metals that lower the friction on power lines and could slash electricity leakage.

The Japanese government has drawn up a “Strategy for Ensuring Stable Supplies of Rare Metals”. It calls for `stockpiling’ and plans for “securing overseas resources’. The West has yet to stir.

http://www.telegraph.co.uk/finance/comment...al-exports.html

[sorwar]

Rare earth metals could be as important to China as oil is to Saudi.

[eachus]

The rare metal in China was over production and export at dirt price.
export these strategy metal business make profit margin similar garment and shoe factory make no sense.
China does plain dumping on world market.

[tphuang]

The Western countries can always restart their production again if they don't like the quotas. It's kind of ridiculous that they are still expected to export as much even as the sap of demand has basically crushed prices.