Rare earth concern: hype or reality? - Matamec Explorations, Inc.

Rare earth concern: hype or reality?26 October 2009A potential Chinese ban has brought rare earth availability into the public eye with manybelieving a supply crisis is closing in. Is this premature talk or a matter of the utmosturgency?A Chinese report on the potential ban of certain rare earth exports has been the talk of themainstream media recently, raising concerns over China’s dominance in the smallvolumeindustry.With a global demand of about 125,000 tpa and production nearly exclusively (over 95%)confined to China, the rare earths rarely enter the consciousness of industrial players inthe developed world.Together with lithium, rare-earths have become commodity in “crisis” replacing oil andwhile dramatic headlines such as Rare earths are vital, and China owns them all may atfirst seem melodramatic, but could well have a strong footing in reality with someanalysts forecasting shortages for some rare metals as early as next year.A total ban on exporting heavy rare earths - terbium, dysprosium, yttrium, thulium andlutetium - has not yet been finalised, but China’s Ministry of Industry and InformationTechnology estimates that domestic demand for dysprosium and terbium is set toovertake supply.Even talk of a Chinese export ban on rare earths has sparked a scramble to securesupplies elsewhere, with several junior companies announcing exploration developmentsduring September and October 2009 (IM 6 October 2009: Rare earth scramblecontinues).China accounts for over 99% of the output for dysprosium and terbium, minerals that areused widely in the development and growth of electric and hybrid vehicles.Rare earths have many other hi-tech uses including in low-energy light bulbs, catalyticconverters, mobile phones, mp3 players, disk drives as well as military applications suchas air missile defence systems.

Many producers outside China were forced out of the market in the early 1990s as theAsian economy undercut prices, and it now produces over 95% of the global total.Chinese export quotas have decreased each year for the last eight years and, morerecently, the government reduced export quotas for the first half of 2009 by around 34%from same period last year.Irreplaceable neodymiumThe Chinese government sees export restrictions as a way of attracting technologycompanies to manufacture value-added products in China.As well as a heavy rare earths ban, China is also considering restricting exports of lightrare earths such as neodymium, europium, cerium and lanthanum.“If the supply of rare earths such as neodymium is restricted this could impact the supplyof magnets used in hard disk drive actuators,” said John Coughlin of US consultancy,Coughlin Associates.“At the very least these magnets might be available only to hard disk drives produced inChina. This could force even more movement of hard disk drive production to Chinafrom other Asian countries,” he added.No replacement has been found for the light rare earth, neodymium, a material used toenhance the power of magnets at high heat, which is also used in wind turbines andelectric motors.One US-based producer of rare earth minerals told IM: “If the entire policy is read, it isvery similar to documents released in 1999 by the PRC government.”“Their main idea is still to get manufacturers to move to China and make the entirefinished good containing rare earth that is ready for sale to the market versus exportingrare earth oxides,” said the source.So, if China is not holding the world to ransom with its export policies as some reportssuggest, any tightening of supply is likely to see a step-up in non-Chinese rare earthsexploration.Rare earth applicationsElectronics: MP3 players, flat screen monitors, mobile phones, digital cameras, harddisk drivesAutomotive: Auto batteries, catalytic convertors, diesel additives, magnetsEnvironmental: energy saving light bulbs

PolishingPhosphors: giving colour to mobile phone and computer screens; used in eco-lightingGlobal rare earth production*Malaysia, Brazil