In this month’s issue of Core Consultants’ Rare-Earth Monthly publication:
• China supporting downstream development
• Trump’s tariff war
• Tesla increasing demand for neodymium
Last month we discussed that China was supporting its downstream industries, including a pigment project in Inner Mongolia. This month, we learn that China is again providing subsidies to separation companies. Minmetals is the latest recipient of such a subsidy, in the form of a tax return bonus to one of its subsidiary companies. Meanwhile, China is continuing its zero-tolerance policies with respect to illegal mining, dispatching more than 40 law enforcement officials in Guangxi over the past month. These efforts are starting to pay dividends as prices have increased; the average unit price of China’s rare earth exports have increased 11.9% y.o.y to $51.9/kg in February.
Outside of China, there have been no major changes to fundamentals that are too noteworthy. Again, the biggest mover of markets is Trump. Last month, the President’s infrastructure spending plan with the goal of shortening the average processing time for permitting was the headline. Now, Trump has begun a tit-for-tat trade spat, enacting significant trade tariffs against the import of steel and technology from China. Rare-earths and other raw materials have so far been left unscathed; however, the concern is that China will start to levy a tariff on its rare-earth elements.
Last time China limited rare-earth exports, it was brought to task by the US, Japan and the EU, and by 2012, China’s policies were rebuked by the WTO. This time, given that the US has started the war, the WTO may have less sway. The US is wholly focused on limiting its reliance on imports to meet its critical metal demands. For a while now, the Departments of Defence and Energy have invested in studying the potential to extract rare-earths from coal. Ucore has now signed a MoU with Kentucky River Properties to extract rare earth elements from its coal fields. It is estimated that concentrations of rare-earths are around 300+ppm.
Looking at the end user market, interestingly we found that for the longest time, Toyota has been trying to reduce rare-earths in its electric vehicle motors, or at least limit its requirements for the more expensive, rarest types. Tesla, bucking the trend as always, has adopted the complete opposite strategy, increasing its reliance on neodymium and permanent magnets. Last year, neodymium prices climbed 40% to $70/kg. The demand for this metal is expected to rise around 8.5% per annum.
Looking ahead at prices…
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The Core Consultants’ Rare Earth Monthly Report was first released in 2010 and became the first regular monthly rare earth publication by a non-Chinese firm. The report analyses global trends in Chinese and non-Chinese production, regulations and trade. It also tracks developments in end user demand and prices. Each issue provides short term (2-months), medium term (1-year) and long term (5-year) price forecasts. The subscriber base to this report is varied and ranges from end-users including global technology manufacturing and industrial, firms, traders, financial institutions and suppliers.