We at CMJ are proud to note that our weekly news is read around to globe. Matthew James, VP corporate and business development at Lynas Corp. of Sydney, Australia, took the time to expand our discussion on rare earth elements. He wrote:
I noted with interest Don Bubar was quick to point out that CMJ's story on rare earths "...contains a number of inaccuracies". As rare earths production is completely dominated by China the facts can sometimes be misread in the translation, Mr Bubar's reply also appears to contain a number of inaccuracies.
Bubar correctly points out the distinction between the 'light rare earths' and the 'heavy rare earths' but then states "...the light rare earths are not in short supply at all." However it is interesting to note that it is two of the light rare earths that have shown the largest price increases to date since the price lows of 2003 with neodymium and praseodymium increasing 480% and 440% respectively, none of the heavy rare earths have increased in price to this extent.
Bubar goes on to say "China has not indicated any intention of limiting the production and export of the value-added derivative light rare earth products demanded in the marketplace," a true but potentially misleading statement. China has not indicated any
intention of limiting the production and export of the value-added derivative product of ANY rare earths. What the Chinese government has done though is:
1. Applied an export quota for ALL rare earth commodity products, and it does not distinguish between light and heavy.
2. Cancelled the VAT rebate for exports for ALL rare earths, both light and heavy
3. Introduced a mining production quota on ALL deposits in China, including the predominately light rare earths deposits and the predominately heavy rare earths deposits
4. Introduced a 10% export tariff this week [Nov. 1] which applies to ALL rare earths commodity products
Declining production in China due to the environmental concerns has had an effect on the South China clays, but also the predominately light rare earths deposits in the north and west of China.
It is the view of Lynas Corporation that due to these restrictions there is a shortage of all rare earths, both inside and outside of China. Those elements used in rare earths magnets (neodymium, praseodymium, terbium, and dysprosium) are in very serious shortage as rare earth magnets demand is growing at 15%-20% per annum. Other applications which are growing strongly, such as energy efficient lighting and hybrid vehicles, are likely to create serious shortages for other light and heavy rare earths in the not too distant future.
I heartily agree with Mr. Bubar's final paragraph, the overall rare earths grade, rare earths distribution, and mineralogy should be considered when evaluating rare earths deposits.
For example, take the Mount Weld deposit in Western Australia owned by Lynas. Mount Weld has a JORC code resource grade of 12% rare earths, although the first eight years will be mined at an average grade of approximately 18% rare earthsby far the richest grade deposit in the world. The distribution is high in Nd and Pr, but also in europium one of the most valuable heavy rare earths. The mineralogy is amenable to good recoveries as demonstrated by the completed pilot plant tests.
Lynas recently raised A$75 million to commence mine development and processing plant construction, which is to be constructed in Malaysia and due to be in production in the second half of 2008. Therefore it appears likely that an Australian company may be the one that breaks China's grip on the world's supply of rare earth elements.
Happy to provide any back-up you may require for the above.
(Dr. James can be contacted at mjames@lynascorp.com or visit the company's website at www.LynasCorp.com.)
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