Over the years, the demand for rare earth minerals has seen dramatic changes. China is currently said to produce 95% of the worlds rare earth minerals and in the early 90’s, only consumed less than 50% of what it produced. With its growing middle class and technological advances, China now consumes the majority of what they produce, in addition to having greatly reduced foreign exports in an effort to build reserves. Through this increasing demand and rising prices, new players have emerged in the supply scene to fill in the gap for these precious commodities. This article discusses the changing environment surrounding rare earth mineral production and the future implications of these changes.
Rare Earth Minerals In High Demand
What is considered to be the top “critical” rare metals currently in demand are: dysprosium, neodymium, terbium, europium and yttrium. The demand for these rare earth minerals has increased proportionally with the advent of new electronics, hybrid automobiles, and mobile technologies. Rare earth minerals are becoming increasingly used in permanent magnets and rechargeable batteries. With the world’s growing desire to ween itself off of its growing dependency on fossil fuels, rare earth elements and their benefits to modern technology and energy storage has become a sought after commodity in many industries.
According to a recent December issue of New York Times, “dysprosium and terbium are in especially short supply, mainly because they have emerged as the miracle ingredients of green energy products. Tiny quantities of dysprosium can make magnets in electric motors lighter by 90 percent, while terbium can help cut the electricity usage of lights by 80 percent. Dysprosium prices have climbed nearly sevenfold since 2003, to $53 a pound. Terbium prices quadrupled from 2003 to 2008, peaking at $407 a pound, before slumping in the global economic crisis to $205 a pound.” What the mining industry expects to see is a renewed interest in these commodities again once the new energy sector begins to gain momentum.
New Market Opportunities
In the early 90’s the mining industry for rare earth minerals was a competitive market involving a number of countries participating. With access to cheap labor and a lack of environmental regulations, Chinese suppliers gained the ability to manipulate the market through predatory pricing. This has forced a number of large mining firms to shut down, one of the most notable being the Molycorp Mine located in Mountain Pass, CA.
With a dwindling supply from China, new market opportunities are appearing for a number of countries with existing production capabilities and countries with untapped natural resources waiting to be extracted. We can expect to see renewed market opportunities for mines with existing infrastructure in North America, South Africa, and Australia to begin resupplying world demand in the next few years. Additionally, long term investment projects are already underway to extract untapped natural mineral resources to meet this growing demand. For example, South Korea has invested a significant interest in acquiring the Salar de Uyuni flats in southern Bolivia. It’s estimated the Salar de Uyuni flats hold 5.4 million in untapped lithium reserves critical to the growth of the new energy sector. Granted these projects are underway it could still be years to a decade before the production is scaled up to meet the production of existing mines.
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