West dependent on China for key resources

Global use of rare earth metals has more than quadrupled in the last years to 125,000 tons per year. Analysts expect demand to reach 200,000 tons in 2014, and, by that time, China will need all it produces for its own use.

“Chinese exports of rare earth metals will be reduced to zero over time,” says Christian Hocquard, economist and raw materials expert at the French geological service BRGM. This is a doom scenario for Western industrial experts. Numerous high-tech industries in Europe, Asia and the US will be without essential raw materials.
China actually has only 53 percent of world supplies within its borders. In the West, overproduction and low prices in the 1990s caused most mines to close. The recent increase in demand has overturned that situation. A kilo of neodymium goes for 22 dollars now, five times as much as in 2002. Dysprosium’s value is ten times what it was in 2002.

But it will cost a lot to reopen the old mines. A whole new industry has to be built. Mountain Pass in the US was reopened in 2007, but will only reach full production sometime this year. In Australia, the Mount Weld mine is expected to produce rare earth metals on a large scale from this year. But last year the company that owns it sold 51.6 percent of its shares to a Chinese company in exchange for cash and debt financing. The search for rare earth metals is a global race.

Europe has no role to play. It has no major deposits of rare earth minerals in the ground and must depend on the rest of the world for supplies. If China stops the supply, the EU will have acute shortages.

NRC International