EDITOR: | February 25th, 2013

Russians to establish a Reserve Stock of Rare Earths

| February 25, 2013 | No Comments

Rare Earth ReserveThe Russian government is considering establishing strategic reserves of rare earth metals in the country in the coming years, according to recent statements of Dmitry Rogozin, Russia’s Deputy Prime Minister.

This will take place as part of the recently approved state strategy on the development of industry rare earths in the coming years, which involves a significant increase of Russia’s share in the global market of rare earths, through the increase of their domestic production.

Dmitry Rogozin, commented: “As a result of recent meeting between the experts of the Russian Economic Development and Federal State Reserve Agency it was decided to establish a reserve stock for rare earth metals in Russia, while the details of this plan are currently discussed.”

Other details of the new initiative were not disclosed. It is planned that such a reserve can be established on the basis of some major Russian rare eaths fields and in particular Tomtorskoey, Lovozero and Katuginskoey, which have the highest content of rare earth metals in their ores among all Russia’s rare earths fields.

According to Rogozin, Russia plans to use the experience of China, which at the initial stage supplied rare earths concentrates at very low prices, dumping and squeezing out competitors from the market, while currently focuces on the production and exports of high-tech products, produced with the use of rare earths, and in particular electronics.
Currently, the estimates of Russia’s rare earth reserves vary greatly. According to Russian geologists, the country’s reserves account for about 30% of the world’s stocks, being equivalent to 28 million tons. At the same time, according to data of the U.S. Geological Committee, Russia and the former Soviet Union states all together have 19 million tons of rare earths reserves, accounting for about 14% of the world’s reserves.

The volume of production of rare earth metals in the USSR was at the level of 3,000 tons of per year, whereas today it is estimated at no more than 2000 tonnes (1.3% of the world market). The majority of production accounts for the products of the first technological process stage, which are exported to abroad, due to lack of facilities for their further processing within Russia.

Russia’s rare earths reserves are characterized by the uneven distribution throughout the country, with about 70% of reserves being located in the Murmansk region, 16% – in Yakutia, while the remaining  in the Irkutsk, Chita regions, as well as the Komi Republic and Tuva.

Although Russia remains the world’s second largest country, in terms of registered REM fields (with about 15 in overall), the latter are characterized by a relatively low content of rare earths.

However, despite this, analysts believe that Russia is still able compete recognized foreign leaders in the global market, as some of its fields and in particular Tomtorskoey field in Yakutia and Chuktukonskoe field (Krasnoyarsk region) are characterized by high content of rare earths.

According to state plans, the establishment of strategic reserves will create conditions for the appearance of the full-scale market of rare earths in Russia, which, however, should be subject of strict state regulation.

It is planned that such a regulation may take the form of establishing of a special state company, which could buy up the excess supply of rare earths in the market (where available), with the aim to keep prices and to ensure profitability of mining companies. The activities of such a company may also include the sale of rare earths state reserves, in a case of sharp increase of market prices for them. The government believes that overall volume of the domestic market will be relatively small during the next several years, so its regulation will not be associated with a significant state investments. There is also a possibility that instead of such a company the function of monitoring of the domestic market of rare earths may be also assigned to Russia’s Central Bank, the country’s main financial regulator.

According to the Russian Ministry of Natural Resources, in the long term, Russia may even try to take on the role of global rare earth market regulator, similar to those role, which was played by De Beers in the global diamond market in the past and to compete with China.



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