Supply & Demand Issues

In 2011 China produced approximately 94% of the total world supply of rare-earth elements (REEs). Over the years, low-cost production in China effectively collapsed the supply base elsewhere. In recent years, China has imposed export quotas, for the stated purpose of remediating environmental issues caused by polluting factories. However, overall production quotas in China have not decreased, and thus the more likely explanation for the imposition of export quotas is to encourage inward re-location of non-Chinese downstream industries and facilities, into China.

Because REEs are chemically very similar to each other, they are always found together, albeit with a range of individual distributions. They are also very difficult to separate one from the other. Because of this, significant capital and operational expenditures are required for facilities that process and separate REEs. It also means that the demand dynamics for each REE affects the dynamics of production for them all.

An ongoing issue in the rare-earth sector is the issue that results from the demand profile of individual REEs not being matched by their natural occurrence in mineral deposits. As an example, the ratio of dysprosium (Dy) to neodymium and praseodymium (Nd + Pr) in a high-performance permanent magnet, may range for 1:50 to as high as 1:2. Light (REE) minerals such as monazite and bastnaesite, however, typically have ratios of perhaps 1:50 – 1:100. Without the development of separate heavy REE (HREE) deposits, excess quantities of more abundant LREEs would need to be produced, in order to access the scarcer HREEs.

This issue of “balance” has resulted in the growing need for the development of separate HREE deposits, to access HREEs without the generation of excessive surpluses. Despite this pressing issue, recent projections from the US Department of Energy and Technology Metals Research indicate that it may be 2013-2014 before new supplies of Nd, for example will be permanently in surplus as a result of new production coming on stream. For Dy the crossover point could be beyond 2017 – and this assumes that projects currently under development are successful in scaling up their processes, and in raising the significant funds required to build the facilities required to produce these materials.

Innovation Metals Corp. believes that its strategy of creating independent, centralized separation facilities will significantly improve the chances of success for the development of these important resources.