The Evolving Market for Rare Earth Elements
Jim Burnell, CPG-11609
2015 has not been a good year for Rare Earth miners. The market has declined significantly and that has had a disas- trous effect on some producers.
In the early part of this century, new applications were being recognized weekly for the rare earth minerals. More correctly considered the elements of the Lanthanide Series, the Rare Earth Elements (REE) include ele- ments #59 through 71 – Lanthanum through Lutetium. (Scandium and Yttrium are commonly included as REE because of their similar properties.) The Lanthanides are used throughout modern technology – from the defense and electronics industries, medical and communications, and industrial fields. Their new-found applications in alter- native energy (especially in permanent magnets in wind turbines) turned up the publicity.
People were becoming aware of the utility of the REE ust as the Chinese government precipitated a speculative cascade. In 2009 China imposed export restrictions on REE. As a result of earlier geopolitical developments, China was producing 97% of the world supply at the time. Just then, a territorial dispute with Japan in the South China Sea caused
exports to be further restricted. Prices rose to new levels. New mining proper- ties were identified; the dust was blown off old properties; busloads of companies rushed to enter the Rare Earth business.
One of the most active companies was Molycorp of Denver. Once the world’s leading producer of REE, Molycorp lever- ages their experience and existing posi- tion to expand aggressively in the rare earth market. They began to upgrade and expand their Mountain Pass Mine in California and purchased several other companies around the world involved in the business. This aggressiveness proved to be poorly timed.
Across the world, the price increases led to a stampede of speculative buying, which led to higher prices … and so on and so on. Smuggling and illegal produc- tion in China helped add to supply. (It was estimated that as much as 40,000 tonnes of rare earths were smuggled in a year). A supply glut ensued.
On top of this, a ruling by the World Trade Organization early this year pushed China to eliminate their export tariffs. And there went the market. As an example, cerium had reached a price of $150/kg FOB China in 2011. In July of 2015 the price had dropped to $1.95/
Dr. M. Lee Allison (1948 - 2016)
Dr. M. Lee Allison, State Geologist and Director of the Arizona Geological Survey, and AIPG MEM-0328, passed away Tuesday, August 16th, at noon after suffering a crit- ical head inury from a fall at his home.
Lee’s passing is a tragic loss for his wife, family, staff of the Arizona Geological Survey, the geologic and geoin- formatics communities, and Lee’s broad circle of friends,
colleagues, and acquaintances around the world. He was an incredibly dynamic leader of the Arizona Geological Survey, and a world-wide leader in many areas that were important to him. We mourn his passing.
Any messages of condolence can be addressed to Arizona Geological Survey, P.O. Box 210184, Tucson, AZ 85721; they will pass along to his family. Lee’s wife, Ann, suggested donations be made to the Association for Women Geoscientists/Salt Lake Chapter or a scholarship program to a university geology department to honor Lee.
Words of Emily Dickinson aptly apply: Because I could not stop for Death, he kindly stopped for me. The carriage held but ust ourselves and immortality. We miss you Lee.
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kg (FOB China). Some of the demand decay was caused by industries using substitutes or by recycling. Whatever the reasons, the price decline has had serious impact on producers.
Molycorp declared Chapter 11 bank- ruptcy on June 25 this year. The stock of big miners dropped 95% from the peak. The China Daily reported that most producers in China are now operating at a loss.
Some light can be seen at the other end. The supply glut is slowly being eaten up. Among the lanthanides, the heavier elements have no known substi- tutes, so prices for those elements have remained stronger and will rebound more quickly. As always in mining, the weaker producers will fall by the wayside. When demand rebounds, more options should exist for supply.
References
Reuters, July 9, 2015. Rare Earth Price Recovery Muffled by Excess Supply
Cecelia Jasamie, August 12, 2015. Most Chinese RE Miners Running at a Loss,
Mining.com
Mark Jaffe, July 5, 2015. Rare Earths Just Not Rare Enough, Denver Post.
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