Rare earth prices have remained sluggish recently, with lanthanum and cerium unsellable, causing profitability of rare earth to decrease sharply.

Rare earth prices reversed their increases in August 2011. As demand for magnetic materials improved since early 2013, didymium prices stabilized, and once rebounded in Q1, hovering around RMB 350,000/mt. Gao Yuxin, an analyst of Ruidow, reported that mainstream prices of didymium were between RMB 370,000-375,000/mt last week, with traded prices lower. That is because didymium supply was ample, but purchases were modest due to low prices and decreasing orders and enterprises cutting production.

Neodymium oxide prices once exceeded RMB 1.40 million/mt in 2011.

Surveys revealed that rare earth prices fell noticeably during the past week. 

Su Bo, Minister of the Industry and Information Technology, proposed at the China Rare Earth Industry Association member meeting that China should construct large rare earth groups.  As soon as the news was reported, rare earth permanent magnet individual shares rose across the board.

New energy automobile is a major consumer of rare earth permanent magnet. Global new energy automobile sales reached 200,000 units, and more and more new automobile types are accepted by consumers, with the development of new energy and hybrid electric vehicle boosting demand for high-end neodymium-iron-boron significantly. But the purchase and utilization of new energy automobiles still need support from the government and people, so the growth of rare earth permanent magnet depend on the environmental awareness of the government and people. Rare earth permanent magnet orders will increase in the short term, and medium-and-heavy rare earth value reassessment investments are optimistic in the long run. Given the energy savings and environmental protection policy, the new energy automobile industry has a prosperous outlook. If new energy automobile and hybrid electric vehicle grow rapidly, the growth rate of global demand for high-end neodymium-iron-boron will reach 17%, and will drive total demand growth to 13%. Low-end rare earth permanent magnet capacity has been in severe surplus, while the low-end capacity fell short of demand. The listed companies that have opportunities to receive high-end product orders will benefit from the growth of neodymium-iron-boron brought by the development of new energy automobile.


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In response to the supply restrictions of rare earth metals, critical in many modern electronics, rare earth magnets are brought up by the international consortium as new solutions to help with the demand from European industry.

One of the consortiums aims is to dramatically increase the amount of rare earth materials recovered and remanufactured from existing waste streams. The project brings together European industry and academia across the supply chain to develop the innovative technologies, business models and market information required to exploit this valuable resource reducing dependence on primary sources.

NFC Southern Rare Earth (Xinfeng) Company’s rare earth separation project was approved by the NDRC.

The project will be constructed in Huilong Town, Xinfeng County, Shaoguan city, Guangdong, and use mature cascade extraction separation technology to produce rare earth oxide. The rare earth separation project will have a capacity of 7,000 mt/yr, and produce 6,531.7 mt of rare earth oxide. It was invested RMB 612 million, with capital fund of RMB 300 million, which accounts for 49% of total investments. The capital needed will be raised by NFC Southern Rare Earth itself, and the remainder non-capital fund will be provided by bank loans. The company stated it will accelerate the construction of the project according to related regulations by central and local governments.


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Baotou is rich in light rare earth reserves, while Ganzhou, Jiangxi province is the largest medium-to-heavy rare earth producing region in the world.

Ganzhou has made great strides in rare earth consolidation.

Meanwhile, Ganzhou still needs to enhance consolidation of rare earth smelting and separation. With regard to industry consolidation and building large rare earth groups, further cooperation between local governments, SOEs and local capital is demanded.

Rare earth enterprises including China Minmetals, Chalco, Inner Mongolia Baotou Steel Rare-earth and Guangdong Rising Nonferrous Metals all want to gain market shares of in ion-absorbing type rare earth in Ganzhou.

China Minmetals is the most powerful rare earth enterprise of all mentioned above.

Minmetals purchased Dingnan Dahua and Ganxian Hongjin in 2008, which are domestic largest and most advanced ion-absorbing type rare earth enterprises and produce the products with most stable quality, so as to form China Minmetals Rare Earth Company. Its rare earth separation and smelting capacity reached 9,000 mt/yr, with the capacity of  Dingnan Dahua and Ganxian Hongjin 4,400 mt/yr and 4,600 mt/yr, respectively.

A number of large rare earth groups will be constructed this year.


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Malaysian stocks got off to a racing start Monday after the ruling coalition secured another term in office by a narrow margin. The result removed the risk of an opposition victory or a hung parliament that would have tested the country’s democratic institutions. Malaysia’s currency rose to a 22-month high on the news; stocks rose 7% in early trading. Government-backed companies led the index higher. But the most dramatic market reaction came in Sydney where investors piled into miner Lynas Corp., which has built a rare earth refinery in Malaysia in the face of local opposition. Opposition candidates had promised to reexamine the mining license. Now it seems that the $800 million plant in Kuantan, which opened in February, should have a smoother run. Shares in Lynas rose 15% to A$0.57.

Lynas stock got a boost in March when a court in Malaysia threw out a lawsuit by environmentalists. But the looming election kept the company on edge, given the support from opposition candidates for the anti-mine campaign. Lynas says that the mine’s impact will be limited and that it has complied with Malaysia’s conservation laws. China is the largest producer of rare earth metals and has imposed export quotas in past years, stoking interest in a diversification of supply. The Lynas plant in Malaysia was approved last November after a lengthy approval process.


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The China Times reported that the MIIT is now making plans for pushing the rare earth consolidation. But no details and precise timing of the plan was released.

Nevertheless, Guangdong Rare Earth Industry Group and Chalco may play the most important part in the rare earth consolidation. Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company is now developing into Gansu, Shandong and Sichuan after integrating resources in Inner Mongolia.

A person from the MIIT familiar with the issue reported the leadership is in favor of building local rare earth groups, which pushed the formation of regional rare earth economies.

Distribution Features of China Rare Earth

Distribution Imbalance
Light rare earth ore mainly distributes in north China regions such as Baotou, Inner Mongolia and Liangshan, Sichuan, while ion-absorbing type medium and heavy rare earth ore mainly distributes in Ganzhou, Jiangxi and Long'an, Fujian.

Various Categories
Rare earth ore categories include bastnaesite, monazite, ion-absorbing ore, xenotime and fergusonite, with ion-absorbing type medium and heavy rare earth ore very important.

Light Rare Earth Ore-Associated Radioactive Element Effects Environment Significantly
Light rare earth ore can be explored in large amounts, but the treatment of radioactive element such as thorium is very difficult, which will significantly affect people's health and environment.

Ion-absorbing Type Medium and Heavy Rare Earth Ore Hard to Explore
Ion-absorbing type medium and heavy rare earth ore is adsorbed in the earth in the form of ion, and is dispersed and difficult to exploit.  


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Five leading enterprises are involved in the consolidation plan in the rare earth industry in China, including Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company, Guangdong Rising Nonferrous Metals, Chalco, Minmetals and Ganzhou Rare Earth. Consolidation of the five leading companies with local rare earth enterprises a crucial step to the industrial consolidation. The consolidation plan is expected to be announced around August. Xiamen Tungsten and China Non-ferrous Metal Industry’s Foreign Engineering and Construction Company are unexpectedly excluded in the consolidation plan.

Many market players believe the industrial consolidation will still face many difficulties, especially consolidation between SOEs and local resources.

5 Enterprises Included in the Consolidation
As local rare earth resources consolidation was finished, further integration is implemented across the industry. The five leading enterprises initially included in the rare earth integration plan are local leading enterprises including Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company, Guangdong Rising Nonferrous Metals, and Ganzhou Rare Earth and SOEs including Chalco and Minmetals.

Xiamen Tungsten and China Non-ferrous Metal Industry’s Foreign Engineering and Construction Company, and Jiangxi Copper are excluded in the list of consolidation, and market players believe the likelihood of integration between each other enterprise is very low.

China announced the Proposals Regarding Promoting Sustainable and Healthy Development of the Rare Earth Industry on May 10th, 2010, requiring China should form a large enterprise-oriented rare earth industry, with the consolidation ratio of the top three ion-absorbing type rare earth enterprises in south China reaching 80%.

Baotou and Ganzhou are major domestic rare earth producing regions, with rare earth output value accounting for 2/3 of total domestic rare earth output value. North China has formed rare earth agglomeration with core enterprise of Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company, while high strategic value ion-absorbing type rare earth in south China lack core enterprise and business are disordered.

                  

Rare Earth Consolidation Facing Difficulties
The manager of the MIIT expressed the rare earth consolidation will be implemented locally first, and then nationwide, which is favorable for the covering of the rare earth industry chain, environmental protection and the realizing of sustainable development target.

China has commenced rare earth consolidation in Jiangsu, Hunan, Yunnan, Guangdong and Sichuan last year.

The MIIT Deputy Director Su Bo said the rare earth industry will put emphasis on acceleration of large rare earth enterprise construction. That market understands rare earth consolidation will be implemented beyond local levels.
The rare earth consolidation between SOEs and local enterprises are still facing difficulties, but local enterprises will discuss how to cooperate with SOEs.

Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Company is absorbing backbone enterprises in Sichuan and Shandong to construct China Northern Rare Earth Group jointly with Gansu Rare Earth New Materials Company,


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