China May Double Rare Earth Exports

February 26, 2012 (Source: Bloomberg) — China, the biggest supplier of rare earths, may almost double exports this year and meet quotas set by the government as lower prices stimulate demand.

Chinese exports were 49 percent of the government-alloted quota in the first 11 months of last year because the slowing global economy sapped demand, the Ministry of Commerce said in a Dec. 27statement. Overseas sales quotas may be virtually unchanged this year at 31,130 metric tons, based on Bloomberg calculations.

“Export quotas may be met this year as overseas demand recovers,” Wang Caifeng, a former official overseeing the rare- earth industry with the Ministry of Industry and Information Technology, said in an interview in Beijing. “High prices last year had deterred purchases and led to inventories depletion. Smuggling also hampered exports through illegal channels.”

Prices of rare earths have tumbled since the third quarter as consumers including makers of electric cars and wind turbines sought to reduce use. The average price of lanthanum oxide, a rare earth used in rechargeable batteries and refining catalysts, was 129,167 yuan ($20,508) a ton in the fourth quarter, 15 percent less than in the third quarter, according to data from Shanghai Steelhome Information.

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Lynas Falls

Lynas Corp. (LYC), developer of the world’s largest rare earths refinery, fell as much as 4.7 percent to A$1.23 today in Sydney, set for its biggest decline in almost two weeks. It was A$1.235 at 1:26 p.m. Sydney time.

China produces at least 90 percent of the world’s rare earths, used in Boeing Co. (BA) helicopter blades and Toyota Motor Corp. (7203) hybrid cars. The nation has curbed output and exports of rare earths since 2009, when quotas were set at 50,145 tons, as part of its wider move to conserve mining resources and protect the environment.

Slashing exports boosted prices and sparked concern among overseas users such as consumers about access to supplies. China halted some mines last year, seeking to curb overcapacity, cut illegal mining and improve environmental standards.

The Chinese government allocated 10,546 tons of first-round export quotas to nine companies, including China Minmetals Corp. and Sinosteel Corp (SINOSZ)., that have met the government’s environment protection standards, the ministry said.

Export Licenses

Another 14,358 tons may be granted to 17 other companies, including Baotou Iron & Steel Group, China’s biggest producer, that was not granted an export license for this year, it said. Baotou is one of 21 smelters waiting for approval, it said.

“Baotou will be able to get the license to resume exports this year,” Wang said. “It’s just a matter of time as it takes a while for the government to review the company’s environmental improvement.”

Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co., the rare earth unit of Baotou Iron & Steel Group, has yet to receive approval to resume exports, a company spokesman, who declined to be identified because of company policy, said today by phone without providing any further details.

Baotou Steel Rare Earth gained 2.6 percent to 51.50 yuan today in Shanghai trading, beating a 0.4 percent gain in the benchmark Shanghai Composite Index.

China is encouraging its companies to develop rare earth mines abroad to help ease pressure on domestic producers, Wang said. China has the technical expertise and human resources required by overseas company in mine development and processing, she said.

Buying Mines

Australia’s Lynas Corp. and Greenwood Village, Colorado- based Molycorp Inc. (MCP) should cooperate with China, including allowing Chinese groups to buy stakes in their mines, said Wang, who’s overseen the industry for more than 30 years.

Australia blocked China’s bid in 2009 to gain control of the world’s richest rare earth deposit amid concern it would threaten supply to non-Chinese buyers. State-owned China Non- Ferrous Metal Mining (Group) Co. in May 2009 offered A$252 million ($271 million) for a 51.6 percent stake in Lynas Corp., which needed cash to resume development of the Mount Weld rare earth mine in Western Australia.

“It was a loss to Australia, not to China,” Wang said, “They should be more open-minded.”

China’s full-year export quota for rare earths this year may be about 31,130 tons, according to Bloomberg News calculations based on first-round quota figures given by the commerce ministry on Dec. 27. The quota was 30,184 tons in 2011 and 30,258 tons in 2010.

Wang is helping form a rare-earth association in China, which is expected to start in the second quarter and will be funded by industry companies, she said. The association will help the government’s planning and drafting rules for the industry, she said.

  1. Seriously, what kind of propaganda hit-piece is this?
    “um, dear bloomberg, I’ve got a HUGE MCP order in and I need some help filling it, can you please put out a totally misleading headline so that the computers who scan them will fill me. Thank you.”
    China isn’t DOING anything. They’re simply maintaining their quota’s as they have set them. It’s their consumers who are doing something… namely doubling their demand to the point they will hit the quota’s and then find themselves in heated competition for limited resources.
    … at least that’s how it appears to me.

  2. Maybe this Journalist and his broker at JP Morgan
    loaded up on the stock.
    I am glad that China came out and clarified their export
    position on REE’s.
    However, the Bloomberg article will be more widely read.
    The power of the media whether intentional or unintentional can
    kick you up,kick you down,and kick you all around…a double edged sword.
    “One man telleth a lie, ten men telleth as truth,etc.etc.etc.
    It is a wild ride…best to stock up on digitalis.
    This video sums up the Media…you gotta love them…they are always
    looking for negative filler.
    Some peoples only success is taking a bite out of others.

  3. A question for you REE technologically savy Bloggers.
    Do you think that there is yet another possible end use for Rare Earths?
    The US is mandating the implementation of rearview cameras on all passenger
    vehicles by year 2014.
    Rare Earth use in digital cameras and ancillary parts to manufacture and
    operate the system?
    Another little trickle off of the Surplus Bloomberg is forecasting????

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