Last week, at a speech I gave for The Right Place, I fielded a couple of questions that I had not heard previously.
The questions either had to do with whether we track the conflict minerals legislation (which readers know we do — feel free to check out a free webinar MetalMiner has put together to address the Frank-Dodd reform) or what we think will happen to China vis-a-vis the rare earth export restrictions.
Though rare earth metals cover 17 different elements, audience members seemed to have the biggest gripe over neodymium. One audience member, a window systems manufacturer, said, “We’ve seen prices increase by 800 percent. This has cost our firm millions of dollars and don’t say we need to look at alternative sources because there aren’t any!”
Though I probably answered one question differently than my colleague would have — “What do you think will happen with the WTO and China’s rare earth export restrictions? — I said I felt the WTO would rule against China (as they ought to) but even so, that only makes a bad situation (sole sourcing from China) slightly better than the underlying concern (China could shut off REE exports altogether).
But upon conducting a bit of research, we’ve come to learn that the supply market for neodymium, in the mid-term, actually looks a lot more optimistic than the supply markets for a range of other metals including dysprosium, yttrium, terbium and europium, according to Technology Metals Research in their report, “Critical Rare Earths: Global Supply & Demand Projections and the Leading Contenders For New Sources of Supply, published in August of this year.
In fact, the supply outlook looks almost cheery as China, the sole source supplier, moves from a 97-percent share today to 79 percent in 2013 and down to 43 percent by 2017. Dysprosium, by contrast, will still remain largely dominated by Chinese production until 2015 when “only 74 percent of supply will come from China.
But alas, the raw material only gets a company so far. Other crucial production processes remain in short supply for each rare earth, including not only the exploration and mining, but the processing and separation — the metal-making processing to separate the alloys as well as downstream fabrication, as required for most neodymium end users. When we refer to alternative sources of supply, we really refer to alternative supply chains.
Nevertheless, the folks at Technology Metals Research have an index on their website that tracks the major rare earth metal development projects. By cross-comparing their research report with their rare earth project index, we can see a small number of projects coming on-stream between now and 2013. These include Molycorp’s Mountain Pass mine here in the US, Lynas’ Corp Mount Weld and Great Western Minerals Group Steenkampskraal operation in South Africa. Each of these will supply neodymium.
Where does that leave a buying organization? Clearly, few options exist right now. Checking our soon-to-be-released enhanced version of MetalMiner IndX, neodymium closed yesterday in China at $187,573 per metric ton. Ouch! No wonder buying organizations seek alternative sources of supply!