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Rare-Earth Supply

Rare-Earth Supply

Current Sources of Supply

An estimated 103 kt of rare-earth oxide (REO) equivalent were produced worldwide in 2011. Mines in China accounted for over 94% of that production. The remainder originated from modest sources in the USA, Russia and elsewhere.

In China, the principal sources of light REO (LREO) production are located in the Inner Mongolia autonomous region and in Sichuan province. Medium and heavy REOs (M/HREOs) are primarily sourced from Jiangxi province. Other provinces also produce REOs.

The Chinese Ministry of Land and Resources allocates rare-earth production quotas to a number of provinces and regions each year. Historically, the actual amount of rare earths produced has been significantly higher than the production quotas allocated. This changed somewhat in 2011, following stricter enforcement by the authorities.

Chinese Rare-Earth Production Quotas and Estimated Actual Production

Province / Region 2007 2008e 2009 2010 2011
Fujian 220 320 720 1,500 2,000
Guangdong 700 1,000 1,500 2,000 2,200
Guangxi 200 200 200 2,000 2,500
Hunan 100 300 800 1,500 2,000
Inner Mongolia 46,000 46,000 46,000 50,000 50,000
Jiangxi 7,400 7,400 7,400 8,500 9,000
Shandong 1,200 1,200 1,500 1,500 1,500
Sichuan 31,000 31,000 24,000 22,000 24,400
Yunnan 200 200 200 200 200
Total Production Quota 87,020 87,620 82,320 89,200 93,800
Official Actual Production 120,800 124,500 129,400 118,900 96,900

Source: Technology Metals Research

Matters are further complicated by the imposition of export quotas on the shipment of rare-earth-based products out of China. Such quotas are allocated by the Chinese Ministry of Commerce, to both domestic and foreign-JV companies. In recent years the total quota for exports has declined. The allocations apply not only to finished REOs, but also to lightly processed, rare-earth containing products too.

Chinese Rare-Earth Export Quotas

2009 2010 2011 2012
Domestic 33,300 22,512 22,983 22,406
Foreign JV 16,845 7,746 7,263 8,590
TOTAL 50,145 30,258 30,246 30,996

Source: Technology Metals Research

New Sources of Supply

Within the last few years there has been an explosion in the number of new rare-earth exploration and development projects underway around the world. As of July 2012, the market analysis firm Technology Metals Research (TMR) was monitoring over 440 rare-earth exploration projects outside of China and India, being developed by over 270 different companies and located in 37 different countries.

Clearly not all projects are equal and it is highly unlikely that the majority of these projects will ever develop code-compliant mineral-resource estimates, let alone progress to the pilot-plant stage and beyond. The number and diversity of these projects, however, does go to show that there are plenty of opportunities outside of China, for the development of new sources of rare-earth supply. However, while the number of potential non-Chinese projects is significant, this number belies the formidable challenges associated with the successful commercialization of such projects. A variety of technical, financial, environmental and political hurdles exist for most if not all of these projects, and these hurdles should not be under-estimated.

Of the more than 440 projects mentioned above, as of December 2012 there were 49 deposits that have been formally defined as a mineral resource or reserve, under the guidelines of a relevant scheme such as Canada’s NI 43-101 or Australia’s JORC Code. Such projects form the basis of the TMR Advanced Rare-Earth Projects Index. These projects are at various stages of development. Ultimately, the successful commercialization of any of them relies on addressing a simple, universal question that is not unique to the rare-earths sector – namely will the project make money? Any project that is going to be successful will require a great-enough margin between the cost of producing finished product and the market value of such products, to ensure that the operation flourishes. This again speaks to the advantages of a company using an independent separation facility for a modest tolling fee, instead building its own facilities.

In addition to the potential new sources of supply mentioned above, there are one or two other advanced projects currently under development outside of China. Probably the most notable of these is the Dong Pao project located in Chai, Vietnam, being jointly developed by Toyota Corp, Sojitz Corp and the Vietnamese government.