Despite precipitous falls in several constituent price points – lanthanum oxide, cerium oxide and neodymium among them – the monthly Rare Earths MMI® held steady over the past month for a March reading of 43, on par with February’s value.

This comes after two straight months of declines for the index, and it, along with our Renewables MMI®, shares the dubious distinction of spending its entire existence under the Jan. 2012 baseline of 100. The majority of the price points in the complex held steady over the past month. But nothing has really changed to skew our existing long-term outlook for this minor metals market.

As we reported on last month’s rare earths index, the trouble for downstream demand of rare earth metals, minerals and oxides is far from over. Industry sources report that China demand for rare earths for the balance of 2013 is likely to remain sluggish, mainly because downstream end-use sectors are not holding up their end, according to metal-pages.com.

Certainly not helping the demand situation is more supply coming on stream. Lynas Corp. reported in a Feb. 27 company statement that the company has finally produced rare earths for customers, including a handy dandy flowchart of its process. Of course, it’ll take a bit to scale this operation, but the fundamental reality of future supply increases portend a depressed rare earths market as far as prices may be concerned over the next few years.

“We are watching the rare earth metal price index very closely because we believe a price floor has finally formed,” said Lisa Reisman, managing editor of MetalMiner. “Now whether that means prices will begin ticking up remains to be seen, but we have struggled to see a floor.”

Primary Price Drivers of Rare Earths Index

After remaining essentially unchanged the previous month, the price of lanthanum oxide fell 22.8 percent. The price of cerium oxide dropped 17 percent. Rare earth carbonate prices dropped by 15.4 percent this month.

The price of neodymium fell 6.6 percent. The price of dysprosium oxide fell 2.4 percent over the past month, the second straight month of declines.The prices of yttrium, terbium oxide, yttria, terbium metal and praseodymium neodymium oxide, among others, kept steady over February 2013.


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The stop of production for protecting the price seems fails to achieve the desired results, for the rare earth prices remain sluggish. Under the pressure of the production, the three rare earth giant, including Baotou Steel Rare Earth, Minmetals and Chinalco Rare Earth, resume the production after nearly four months' production halts.

With the coming of the traditional rush season of rare earth consumption in March and April, the downstream application providers are expected to launch a new round of supplementing inventory, and there's a common wish of rises in rare earth prices among industries.

Enterprises gradually resume production

According to the reporters learning from Baotou Steel Rare Earth, the range of the corprorations resuming production covers the smelter directly under Baotou Steel Rare Earth, Huamei Corp., Hefa Corp.,Ganoderma company as well as the Quannan Jinhuan Corp. and Xinfeng Xinli smelting separation plant. Also, Minmetals Rare Earth and Chinalco resumed production after the Spring Festival as well.

"Generally speaking, there comes the traditional peak season of consumption of rare earth in March and April. In terms of corporations, several companies halted for a long time. Therefore, the resumption of production sounds reasonable to come along with the rush season at present," said an analyst, "however, from the current point of view, the downstream demand is not active."

Constrained by excess production capacity and sluggish downstreams demand, the price of rare earth in 2012 experienced a sharp decline in the stock market. For example, the offer of praseodymium nedymium oxide was 760.000 at the beginning of 2012, while it has dropped to 400.000 by the end of last year.

Under the pressure of price, Baotou Steel Rare Earth was the first to announce halts. Subsequently, the other two rare earth giant, Minmetals Rare Earth and Chinalco Corp. annnounced as well. Despite these giants,
some small and medium-sized enterprises have also joined in it, such as some small companies doing with rare earth smelting separation and magnetic materials.

                 

Looking forward to a bottom price of rare earth

However, the strategy of protecting the price by halting production did not reach a desirable result. For instance, the price of praseodymium nedymium oxide only realized a rise of 10% in a short term of the shutdown and sank down later. Now its price is just around 350.000.

As it is analized, there're two main reasons for its low effection. One is the diversity of the sales channels, which led to a gap between the price of formal-produced and illegal-produced rare earth. the other reason is that downstream demand is indeed the doldrums and the overseas supply began to increase.

According to media reports, the U.S. energy company Molycorp and Australia's Lynas Mining Corporation's Mount Weld mine were to start second mining. These two companies were expected to achieve an annual output of rare earth of about 40,000 tons, which will have a direct impact on the export of China's rare earth industry.

As far as we understand, there're still some small rare earth separating enterprises which do not resume production until now, and their downstream demand remains slowdown. Presently, with the coming of the rush season, whether the rare earth price will bottom up depends on the demands of the downstreams.


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China may only have 30 percent of the rare earths in the world, but they essentially have a monopoly--which the rest of the world has been tirelessly trying to work around. (To wit: Japan looks to Vietnam, the U.S. looks to California and Missouri, everyone looks under the sea.) In a slightly devilish business move, China sought to tighten their grip and raise prices by eliminating all sales to its major buyers, the U.S., Japan, and Europe, for one month.

During the sales freeze, China is also consolidating its various rare earths businesses and buying more rare earths. At the moment, about 60 percent of the country's rare earths supply is controlled by a single company, called Inner Mongolia Baotou Steel Rare-Earth. That company is artificially created and listed as a state-owned company, as China has already forced some 35 local companies to either absorb into Inner Mongolia Baotou Steel Rare-Earth, or fade away.

Analysts, according to the AP, think the plan will probably work; rare earths prices have been sliding downward lately, a trend China would certainly like to reverse, and it'll also give the country an opportunity to work on its locally-produced rare earths magnet industry--a much more profitable enterprise than simply selling raw materials. Of course, it's not going to do much to discourage, you know, every other country on the planet from trying to find an alternative to buying rare earths from China.

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Honda developed a new method, which is extracting rare earth metals from the waste batteries and other products for recycling and manufacturing new batteries again.

There is no doubt that electric vehicles and hybrid electric vehicles are cleaner cars. Compared to fuel vehicles, they emit lower, even zero exhaust gas.

Whether grid charging emits greenhouse gas depends on the source, but the battery itself is also a problem. In addition to the greenhouse gas, mining rare earth metals also produce pollution.

Recycling can reduce the demand for raw materials extraction, such as aluminum, whose recycling utilization rate of 100%. Compared with mining aluminum ore, recycling consumes less time and energy, and lowers greenhouse gas emissions at the same time.

Honda revealed they can extract more than 80% of the rare earth metal from those used batteries to make new electrodes of  new batteries. In this way, The demand for new materials will be reduced to below 20%.

Later, Honda plans to expand the recycling project to other rare earth sources, including old batteries from electric motorcycles as well as scrap metal recycle bins.

                  


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The key construction project in Shaoguan City --- the Xinfeng rare earth separation project of the Zhongse Southern Rare Earth to process 7,000 tons of rare earth per year, has passed the assessment of the international consulting firm and the Ministry of Environmental Protection Department and entered the land pre-trial and social stability maintenance risk assessment stage.

Early at the beginning of the workday of this year, Xinfeng county has organized a theory-learning group and invited Tu Ganhua, the deputy general manager of the Xinfeng Corp., Zhongse Southern Rare Earth and rare earth expert, to carry out the "understanding of rare earth seminars and collectively learned Rare Earthindustrial development-related knowledge and complicity of rare earth industry development plan. Nearly 300 people including the county authority and the principal leaders of the towns (street).

Mr. Tu firstly introduced the latest news about the city's key construction projects, that is the rare earth product of processing 7.000 tons of rare earth of Xinfeng Corp. Subsequently, he explained in detail the basic knowledge of the rare earth elements, and carried out the analysis of the situation of China's rare earth resources, introduced rare earth products' wide range of applications and discussed with the participants on how to develop, use and protect the local rare earth resources in Xinfen, so as to cultivate feature industry and accelerate the development of the economy.

             


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In recent years, rare earth products has been in oversupply situation, and there even appeared the price war, which not only led to some product prices falling more than 40%, caused a great deal of pressure on profit margins for products, and forced many of the poor performed corporation into bankruptcy, even if most of the existing enterprises are operated under a very low profit.

According to the analysis of the business communications company in the United States, it seems that the situation reached its lowest point and there's an expectation of reversing this situation. Particularly with the growing of the demand of automobile, computer, consumer electronics products and mobile electronic devices, the application of rare earth, especially in the automobile exhaust catalysts, permanent magnets, and rechargeable batteries will continue to increase. In the next few years, the demand of Neodymium and cerium for permanent magnet and automobile exhaust catalytic converter  will increase in a larger rate. In addition, Ni-MH batteries, medical devices, sensors, dental and surgical lasers will also demand for more rare earth. Magnetic refrigeration will be commercialized and Erbium-doped optical fibers will enter a new round of demand.

Therefore, the U.S. commercial communications company predicted that the global demand for rare earth in the next few years will grow at the speed of  an annual 3.2 percent rate and reach about 90,000 to 100,000 tons. In that time, the world's rare earth output value will reach $ 2 billion.

              


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Learned from the Jiangxi Nonferrous Geological Prospecting Bureau, the council determined prospecting goals this year, year and strive to implement more than 10 medium-sized tungsten ore, copper ore, iron ore, lead and zinc, gold and other mineral exploration were copper, gold , more than 3,300 tons of lead and zinc, chromite, iron ore and other resources, and the transfer of five prospecting and mineral rights transfer income of 200 million yuan.

It is reported that this year the council geological prospecting work of national implementation prospecting breakthrough strategic action and Jiangxi Province, Poyang Lake Ecological Economic Zone, support the Gannan and other former Central Soviet Area revitalization and development of the favorable opportunity, geological prospecting efforts to achieve new breakthroughs in full a dozen more than the years the implementation of the medium-sized tungsten ore, copper ore, iron ore, lead and zinc, gold and other mineral, including: the implementation of large, two extra large tungsten mineral deposits, the implementation of the medium - large copper producer to 2, the implementation of the medium-sized iron ore origin 1 to 2, 2 implementation - large lead-zinc producer, newly discovered large gold Origin 2 to 3 new implementation of a number of independent mineral rights exploration base for the new provincial focus on prospecting a breakthrough District. Large copper-the sulfur gold mine detailed investigation report and submit, verify very large gold mine exploration report each.

Year and strive probe was 32.95 million tons of copper, gold, lead, zinc, chromite, iron ore and other types of mineral resources, including: exploration tungsten trioxide resource of 300,000 tons of copper resources of 500 million tons, gold resources 665 tons of lead and zinc resources in the amount of 100 million tons of chromite resources of 10 million tons, 10 million tons of iron ore resources. Through these efforts, and strive to achieve the business objectives throughout the year: a geological prospecting business currency workload of 200 million yuan, drilling footage over 200,000 m, the mine sales revenue of 100 million yuan, 10 million yuan of profits, the transfer of five prospecting rights, tenements transfer revenue of 200 million yuan.

According to reports, last year the council output value in the geological survey, talent introduction, drilling footage qualification upgrading achieved the best results in history, a total implementation of the geological survey of 146 projects, the introduction of various types of technical personnel more than 200 people, drilling footage super 200,000 meters, qualification upgrade or new legislation 18, the amount of the contract surpassed 100 million yuan, the Dongxiang I Square gold-lead-zinc census project, Fuzhou Chongren Dahua tungsten ore census project, Yichun the Yuanzhou jinrui gold mine exploration Zimbabwe project achieved good prospecting effect.

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Local residents, this place is to commence in May and June of last year, refining rare earth. The site area of ​​four or five Shimu, there is a the physical penetration separation pool, chemical reaction pool. The chemical reaction pool inside the acidic liquid such as oxalic acid, not far from the store after the semi-finished rare earth refining. Chemical reaction of the exhaust gas liquids, basically direct emissions, the number of submissions in the downstream red liquid in can be seen everywhere in the drains. Local residents downstream vegetable plot has been contaminated.

It is understood that the rare earth refining process is more complex but also very low content in the ore, rare earth elements belonging to national strategic material, and high prices in the international market, so people have been in order to seek benefits for illegal refining rare earth. Need a lot of water in the rare earth refining process, refining rare earth would choose to water and emissions convenient, near water sources or reservoirs.

Shenzhen University professor in the Department of Chemistry and Applied Chemistry, Zhen said, every attached pole will be used to a large number of solvents, these media requires a lot of water, so it's water consumption is great. Wen said the Professor of the extraction of rare earth has been strict control must be state licensed to carry. Once refining rare earth waste acid, waste, waste without any treatment directly discharged into the water source, will produce a very bad impact on the surrounding environment.

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Consumers delay purchasing further and lose confidence in current market. Neodymium metal mainstream prices slide from RMB430,000-450,000/t(USD53,064-72,360/t) last week to RMB410,000-430,000/t(USD49,848-53,064/t) at present.

A source from a smelter in South China claimed that the plant lowers their offer further to RMB430,000/t(USD53,064/t) at the moment. As consumers rely on immediate purchasing, they are under great pressure to conclude deals in bulk. "We have to lower our offer to stimulate deals for the time being." said the source.

"I am pessimistic about the future market," added the source, disclosing that the plant produces around 25 tons of neodymium metal per month.

A source from another smelter in South China noted that buyers are still cartious in rebuilding stocks in bulk. The mainstream prices slide slightly to RMB410,000-430,000/t(USD49,848-53,064/t) at present. "We resume production this month and now it is hard to conclude deals as consumers delay pruchasing further." said the source.

"I heard that some suppliers even sold the material at RMB400,000/t(USD64,320/t) last week," added the source, disclosing that the plant produces around 30tons of neodymium metal per month.

             


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