A look back over 2017 saw huge development in the rare earth market on four levels, namely policy, price supply and end-user markets.
With respect to policy, China’s Department of Raw Materials Industry and the Ministry of Industry and Information Technology organised the Chinese rare earth industry into six groups, the last of which was completed earlier this year.
The first half of the year ended with China issuing its production quotas, which included production of 52,500 tonnes of mineral products and 49,925 tonnes of smelted products. July saw the implementation of an on-site verification process conducted in five main Provinces and Inner Mongolia’s autonomous regions which assisted in weeding out illicit material.
With respect to supply, in October Jiangxi Province took the lead in introducing rare earth whole chain management measures which ensures that the province could take control over the mining, smelting, separation, resource recovery and trade of rare earths. Furthermore, any producer that meets this standard, would then be allowed to mine, import and trade in rare earths.
More stringent controls both in terms of illegal mining and environmental, coupled with stockpiling by the State Reserve, resulted in a higher proportion of legitimate material and improved prices. Moreover, the fact that China’s industry was rationalised into six producers gave the country control over prices. This is evidenced by Rising Non-ferrous Metals Company’s planned shutdown in October following a slowdown in prices in September. Similarly Ganzhou’s Rare Earth’s Group’s official website revealed that Southern ionic rare earth enterprises Alliance initiatives would cease production in October. The upshot was that praseodymium, neodymium and gadolinium prices rose 30% during that time.
Higher prices have spurred a renewal of investments into the rare earth sector outside of China. Rainbow in Burundi began shipping material, Lynas continued to be in the black, Mkango resources planned to start mining Songwe Hill in Malawi within the next three years. Hastings has entered into an MoU with a Chinese company to provide 2,000 tonnes of mixed rare earth carbonate and Russian State-owned Energy Company, Ou Tanke Group Co, Ltd is expected to jointly develop Kyrgyz-based rare earth mine with Baotou City Hong Bot Technology Co. We anticipate that more funding will become available in 2018 and we should see further development of rare earth projects outside of China.
In addition to developing rare earth projects, investment in alternative sources of rare earths were seen in 2017. Perhaps the most high profile was the support of rare earth extraction from coal sources, which was sponsored by the US Department of Defense. The Trump Administration has been particularly vocal about reducing US reliance on imports for critical minerals and we therefore expect to see more funding come available for these types of projects in 2018.
Japan too has tried its utmost to protect its interests and has elected to keep the import tariff for quicksetting magnets from China at zero. Japan is the largest importer of these magnets which is used in the development of electric vehicles. Keeping this rate at zero is expected to offset some of the increases in production costs.
Going forward we expect that 2018 rare earth market should continue to increase steadily, driven by increased usage of clean energy, such as windpower and the continued uptake of electric vehicles. These factors which require permanent magnets should continue to support the rare earth market.