Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

China Flexes It’s Rare Earth Muscles

Commodities / Metals & Mining Oct 02, 2010 - 05:17 AM GMT

By: Anthony_David

Commodities

The stakes of the recent dispute between China and Japan over the Japanese detention of a Chinese fishing trawler has reached a head with China blocking the export of precious rare earth metals to Japan. No official announcement has, however, been released and the Chinese Commerce Ministry has strongly denied the imposition of such an embargo. Any official ban on exports would allow Japan to complain to the World Trade Organization (WTO) but with no official Chinese statement and only the reported prevention of ships being loaded, there’s little room for Japan to react. Japan has not received any official communication about a ban either.


Japan and the US are heavily dependent on China for rare earth metals and are China’s primary customers. Japan has been trying to secure its supplies to some extent by setting up rare earth processing units in northern Vietnam, which has small reserves of the metals. Rare earths smuggled from southern China are also processed here but China has been implementing strong measures to limit smuggling.

As reported last month, China, which owns 97% of the global supplies, produced 120,000 tonnes of rare earth metals in 2008 followed distantly by India with 2,700 tonnes. Further, China’s low prices have pushed most other companies out of the rather costly rare earths production market. To top it all, China has been limiting its export quotas and increasing the fear of a global deficit. Prices of rare earth metals have skyrocketed ever since July when China announced a 72% cut in its export quota for the rest of the year.

The high prices have caused investors and hedge fund managers to focus a great deal of attention on the commodity. However, Chief Executive Constantine Karayannopoulos of Canada’s Neo Material Technologies said that a price bubble has developed in the rare earth metals market, increasing the chances of a sharp price drop in the near future. He said, “At the end of the day, rare earths are not that rare.” In his opinion, while mining makes sense at today’s high prices, he did not think the prices would be sustainable in the long-term.

In reality, rare earths are fairly common and the only reason they are “rare” is the fact that mining and processing them are a highly capital intensive affair. Processing costs are heightened because the metals generally occur mixed with deposits of radioactive uranium and thorium and the cost of preventing radiation leaks is very high. Jack Lifton, who specializes in technology metals and rare metals, said, “The economics of rare earths mining are difficult and challenging. If the goal of a mining company is just to produce unseparated concentrates, it will most likely fail as a free-standing economic enterprise.”

Analysts such as Charles Kaplan, an institutional broker and adviser at du Pasquier, consider the situation as a threat to US supplies and think the US government should subsidize prices of domestic rare earths to ensure a steady supply. Lifton thinks the US could achieve self-sufficiency by focusing on California for the heavy rare earths and on Alaska for the light rare earths. In fact, efforts are already on to reopen the rare earth mine at Mountain Pass, California. The mine was closed in 2002.

Several analysts think there are enough deposits in China, Canada, South Africa and Australia to meet the future global demand. South Africa’s Steenkampskraal Mine, owned by the Rare Earth Extraction Company Limited (Rareco), is being reopened after four years. Rareco has already signed a ten-year offtake agreement with the US rare earths processing company Great Western Minerals Group Limited (GWMG) and production is expected to begin in late 2012. Vice President Richard Hogan of GWMG said, “We are determined that Rareco and GWMG will become the first producer of heavy rare earths outside China.” The icing on the cake is that Steenkampskraal has the world’s highest known grade of heavy rare earths.

By Anthony David

http://www.criticalstrategicmetals.com

The mission of the Critical Strategic Metals Web Site

is to serve as a monthly compass for those who take a fundamental view of investment regarding the Molybdenum, Manganese and Magnesium metals markets, are concerned with the emerging critical under-supply of these strategic metals to Western nations and wish to profitability chart their course. Each month we will research and provide, in as short and concise a manner as possible, the most applicable information available on resources that will have the biggest impact on our day to day lives. Click here to sign-up for our FREE monthly report

© 2010 Copyright  Anthony David- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in