Japan Crisis May Impact Rare Earth Prices

15 Mar

The aftermath of the devastating earthquake and tsunami in Japan  has resulted in a precipitous drop in demand from one of the world’s major users of rare earths. As a result, analysts report rare earth prices may ease temporarily.

Over the long term, however, rare earth prices are heading higher, as global demand trumps supply over the coming years. Rare earths are essential components of devices ranging from wind turbines to smart phones.  China now  controls nearly 95% of rare earth production.  However, Chinese reserves account for only one-third of total global reserves.  Over the long term, China may become a net rare earth importer as its domestic demand increases.

In fact, a new refining operation in Malaysia currently under construction by Australian mining company Lynas may give China a run for its money in the rare earth market.   Upon completion, the new plant on the eastern coast of Malaysia may be capable of processing about 11,000 tons of rare earth oxides a year; potentially meeting one third of total global rare earth demand in as little as two years.


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