Hafnium, indium, neodymium, erbium, europium...These are a few of the rare earth metals that make up most of the electronic guts of the world’s high technology.

“Rare earth” refers to the scarcity of easily-mined ores of the elements. Last month, we discussed a breakthrough in large-scale electrolysis that could make refining these ores and oxides much easier; now, Japan’s announcement of the discovery of a huge deposit of rare earths could make the market that much more competitive.

For us, that means cheaper electronics. If Japan can produce its own rare earth metals, as opposed to depending on imports from China (where 97 percent of rare earth metals in the world are produced), then China will have to lower its own prices on metals to remain commercially competitive. Breaking China’s monopoly on rare-earth resources could have wide-ranging consequences for the entire electronics industry.

This is the second major deposit discovery made by Japan in the last two years. A team led by Yasuhiro Kato of the University of Tokyo found caches near Hawaii and Tahiti in 2011 that were so rich in rare earths that one square kilometer of seabed could produce as much as 20 percent of the world’s annual consumption. Now, they’ve discovered a second plot of rich mud at the bottom of the Pacific.

Undersea mining has its own set of environmental issues; it’s not entirely clear yet how the techniques used can disrupt deep-sea life. Kato and his team will be investigating the new cache in a two-year study before attempting to start the mining process.


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The joint study group of Yamaguchi University, Ehime University and University of Tokyo released a report on April 2nd saying they had discovered a new mineral that contains rare earth.

Japan is confirmed to have massive high concentration rare earth reserves in seas around Minami-Tori Shima. Japan believes these resources will not run out in 230 years, and the grade of rare earth is about 20 times higher than China's.

Japan has been importing rare earth from China, while China supplies 90% rare earth to the world. But the situation may change. Japan's rare earth reserves is 10 times more than China's, which can be used for hundreds of years. According to Lin Boqiang, Director of Energy Economy Research Center of Xiamen University, the discovery in Japan is in line with China implementing rare earth export quotas.


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Ganzhou Rare Earth Group was founded recently, and that means the core industrial group in major domestic rare earth producing region came online, and it's also an important step of domestic large rare earth leading company construction.

As high-tech industries develop rapidly in recent years, global demand for rare earth and consumption have been growing fast. China’s rare earth reserves accounts for 30% of the total volume in the world, and the country supplies 90% rare earth to the world. But the rare earth industry in China has been dispersed, disordered and polluting.

China’s rare earth industry needs to inspect exploration orders and raise industry consolidation ratio to develop healthily. China has taken effective measures recent years to the rare earth industry. On May 10th, 2010, China released the Proposals Regarding Promoting Sustainable and Healthy Development of Rare Earth Industry, pointing out China should form a rare earth industry led by large groups, and the consolidation rate of the top 3 enterprises in rare earth industry in south China should reach 80%.

The Suggestions Regarding Accelerating M & A at Major Industries was released on January 22nd, 2013, ordering China should push resources consolidation, and reduce the number of rare earth miners, smelters and separators, raise industrial consolidation rate and form the rare earth industry led by large enterprises.

Baotou and Ganzhou are major rare earth producing regions in north and south China, with rare earth output value accounting for 2/3 of total domestic rare earth output value.

Ganzhou is a major rare earth producing region in south China, and has developed rare earth mining and processing for over four decades. Of the 6 existing rare earth mining permits, 44 are in Ganzhou.

The Ganzhou Rare Earth Group is a large enterprise engaging in mining, smelting, separating, deep-processing and utilization, trade and researching, and the only group owning rare earth mining permit in Ganzhou.

Domestic rare earth market is under merger and acquisition, covering Minmetals, and Inner Mongolia Baotou Steel Rare-Earth Hi-Tech, Ganzhou Rare Earth and Xiamen Tungsten.

Inner Mongolia Baotou Steel Rare-Earth Hi-Tech is now constructing China Northern Rare Earth Group jointly with Gansu Rare Earth Group, acquiring backbone enterprises in Sichuan and Shandong province. Ganzhou Rare Earth and Inner Mongolia Baotou Steel Rare-Earth Hi-Tech are the two most important rare earth enterprises in south and north China, which will help realize the target of constructing national rare earth industry.


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Capacity utilization rate at the rare earth industry fell short of 40%. According to China Nonferrous Metals Industry Association President Chen Quanxun, rare earth overcapacity is very severe, with capacity utilization rate below 40%.

Chen Quanxun said capacity of aluminum, industrial silicon and rare earth has been in oversupply. The capacity utilization rate of industrial silicon was less than 30%, with capacity utilization rate of aluminum reaching 80%.

 "Capacity surplus of industrial silicon and rare earth is very significant." Said Chen Quanxun, "The most effective measure to ease capacity surplus is to expand utilization fields."

But China is weak in rare earth utilization, such as rare earth permanent magnetic material, fluorescent material and catalyst. High-end rare earth permanent magnetic materials are mainly produced by Japan, while only several enterprises including Zhongke Sanhuan, Ningbo Yunsheng and Advanced Technology & Materials Co., Ltd (AT&M) produce high-end rare earth permanent magnetic materials in China.

Many domestic enterprises mainly engage in low-end ferrite magnets production, and fierce market competition and high rare earth costs forced them to reduce rare earth utilization or even suspend production. In this context, the capacity utilization rate of rare earth fell short of 40%.

Annual earnings of rare earth enterprises in 2012 slid across the board. Rare earth exploration and separation are most profitable of the industry chain. Rare earth prices dropped sharply in 2012, and upstream profits were also down. Inner Mongolia Baotou Steel Rare-earth (Group) Hi-tech Company ordered its upstream companies in north China to suspend production for three months. According to the company's annual report, net profits in 2012 were RMB 1.51 billion, down 56% from RMB 3.478 billion in 2011. The company reported with high inventories at hand, their cash flows were much lower than annual net profits.


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