Prices of Rare Earth Minerals Expected to Rise

http://goldmoney.com/gold-research/prices-of-rare-earth-minerals-expected-to-rise.html

2010 Nov 26

Roman Baudzus writes --

Midweek it emerged that China's exports of rare earth minerals had decreased by 77 percent in October compared to the previous month. According to data issued by the Chinese authorities, the exports plummeted to 830 metric tons in October after reaching 3,660 metric tons in September. Experts put this development down to a government announcement from September, which declared its intention to drastically reduce the export quota for rare earth minerals. Analysts pointed out that the current situation would further boost the prices of rare metals.

While the current situation caused pandemonium among leading industrialised countries such as Germany or Japan, they are simultaneously looking to find a solution to the procurement problem. Rare earth minerals, which include metals such as scandium, yttrium, neodymium and europium, are essential for the production of leading technology applications. Especially new or alternative technologies, which generated promising industries such as wind energy, solar energy, nano technology and micro technology, could be faced with a pause in production. About 90 percent of all rare earth minerals are nowadays mined in China, which reflects the industrialised countries' current dependence on China. In the case of neodymium, which is used in the production of electric batteries, China's global export share even amounts to 97 percent.

Nevertheless, many of today's problems are home made. The industrialised countries had missed the opportunity to invest more capital in the exploration of new mining capacities in the past. Experts explained that there was also great potential for the exploration of rare earth minerals in countries like Australia, Canada or the United States. However, it would take six to ten years from the beginning of the exploration process until the start of the mining activities. Particularly Japan had to find a solution to its procurement problems quickly, since until recently, most of the country's industries had imported a great share of their rare earth minerals from China. As the Japanese Ministry of Trade announced in October, the country has reached an agreement for the exploration and the future mining of rare earth minerals with Vietnam in order to substitute part of its imports from China.

As emerged on Tuesday this week, Australia also promised Japan long-term delivery of rare earth minerals. At the moment, Japan is the fourth biggest importer of the rare metals worldwide but will have to wait until 2013 for Australia to start supplying the metals. It will take Australia until then to put the first new rare earth minerals mine into operation. The opening of a second mine is scheduled for the year 2014. Until then, China will have an effective tool on hand to put pressure on the industrialised countries. According to analysts, further price increases in the rare earth minerals sector can be expected in the near future, due to the current bottlenecks and the tense political situation.

Published by GoldMoney
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Written by Roman Baudzus - Contributing Writer