China Welcomes Foreign Investment

In the latest issue of our Rare-Earth Monthly, we discuss how environmental crackdowns will hit the rare-earth market further, that non-Chinese projects are making headway, and that China has lifted restrictions on the involvement of foreign investors in its key industries.

Although the market remains oversupplied, prices increased through April and held steady into May except for minor downward movement in Japanese Pr oxide prices and the average price of magnetic materials; some positive movement was also seen in the European cerium market. We expect the situation to remain stable into next month even though production quotas will increase.

More eventful are the changes to the global supply outlook stemming from the fact that China wishes to attract additional foreign investment to aid in the development of its manufacturing industries. Roughly 22 items were subject to policies to restrict foreign investment that have now been revoked.

For the first time in over 20 years, international investors will be fully permitted to invest in China’s key industries. Rare-earth smelting and processing, as well as the electric vehicle market, will no doubt receive considerable international attention. However, we caution that China has also announced a three-year target to reduce air pollution to acceptable levels; RE production will almost certainly be affected by this change.

Already, more than 35 infringements have been uncovered in Guangxi relating to rare-earth leaching processes. Authorities have made it clear that they wish to close the offending operations, but suspect that a subsequent rise in illicit mining would be highly likely and counterproductive.

Since April, we have noted a number of African-based rare earth projects beginning to advance. Mkango’s Songwe Hill project received funding from Talaxis, Rainbow Minerals in Burundi has started to ship, and now Steenkampskraal in South Africa’s Western Cape is completing its Bankable Feasibility Study, although high thorium levels at the site will present major challenges attracting funding. In this issue, we highlight five international projects with
significant NdPr potential.

Additionally, Baotou Rare Earth’s High-Tech Zone, the home of a new material processing base is now fully restored and operational. The zone is planning to produce 2,800 tonnes of rare earth NdFeB following a $187.5 million investment. The plant should be operating at 90% capacity in July, but once the project is operating at full capacity it should have created around 3000 jobs and be producing over $1.5bn of material each year.

Prices in June began to decline, but…

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