First, the bad news.
China's constrained rare earth supplies will be an "irreversible trend" and prices will remain at high levels, according to Zhang Zhong, general manager of Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co.
Zhang should know, as his concern is China's leading rare earths producer - the Baatou mine produces more than 95 percent of China's production, while Chinese mines currently account for 97 percent of global supplies.
The increase in global demand for rare earth metals has sent prices soaring in world markets.
According to the China Nonferrous Metals Industry Association, since January rare earth metal product prices jumped 200 percent, with the prices of some of the rarer commodities rising 500-1, 900 percent. Since January China's exports grew 830 percent to $1.54 billion.
Now, the good news.
Despite fears of Western capitalists, Beijing apparently has no immediate plans to curtail supplies.
And finally, the interesting news.
The Chinese Ministry of Industry and Information Technology said on its website that it will conduct a broad audit of domestic rare earth metal producers in Inner Mongolia to check for production quota breaches. The audit's intention is to uncover rare earth metals producers breaching existing regulations and continuing covert trading in rare earth metals.
Analysts nervously track Chinese policy, as since 2003 China has reduced the amount of rare earths available for export by 40 percent, while over the past decade global demand has tripled from 40 000 to 120 000 tons.
Earlier this year China curtailed its total output of rare earth oxides to 93 800 tons, up only 5 percent from 2010 production levels and also recently raised taxes on rare earth elements for the second time, leading foreign analysts to conclude that the era of "cheap" rare earths is over.
Rare earth elements (REEs) are used to produce everything from wind turbines to solar cells and low-energy light-bulbs as well as iPhones and X-ray machines. Most ominously for Washington, RREs are also a strategic component of many U.S. cutting-edge high-tech weapons systems, incorporated in the guidance systems of missiles and laser-guided munitions.
Discuss in our Forums
See what other readers are saying about this article!
Click here to read & post comments.
4 posts so far.