It's a Rare Earth

A slurry of rare earth stories as major newspapers report on China tightening its exports of rare earth minerals. In Australia this was generally reported with reference to the share price of Australian mining companies. I've inter-cut sections from the following two related stories by Barry Fitzgerald.

Australian rare earth stocks on the rise
SMH, 30th December

Glittering earthly treasures
The Age, 30th December

AUSTRALIA'S emerging rare earths producers and explorers are enjoying a year-end surge in value thanks to China's latest move to limit supplies from its dominant industry to the rest of the world.

China's announcement that it is cutting the export quota for rare earths by 35 per cent in the first half of next year renewed expectations that drastic price increases could be ahead for the subset of 16 metallic elements that have growing high-tech applications.

New mine developments in Australia are seen as critical to breaking China's grip on supplies. As a result, ASX-listed developers were chased by investors yesterday. Lynas Corp surged 10.8 per cent or 17.5¢ to $1.795 and Arafura climbed 13.5¢ to $1.355.

According to the US Geological Survey, rare earths are relatively common in the earth's crust.

But their concentrations are often too low to make extraction economically viable.

The world has nevertheless grown nervous about China's dominance of supply, particularly following Beijing's recent directive to suspend/delay shipments to Japan in an extension of their territorial dispute in the South China Sea.

Japan brought its fears to Canberra last month, prompting the Foreign Minister, Kevin Rudd, to say that Australia "understands the significance of rare earths globally".

It was shortly after the trade visit that a deal was unveiled under which $US250 million in Japanese government agency financing will be made available for an accelerated expansion of Lynas's Mount Weld rare earths project near Laverton, in Western Australia, and the project's associated processing facilities in Malaysia.

It was the Rudd government that blocked a proposal last year for China Non-Ferrous Metal Mining Company to acquire a 51.6 per cent interest in Lynas for what can now be seen as the knockdown price of $252 million.

At yesterday's closing price, Lynas was a $2.9 billion company.

What a difference a day makes! But how "the world" can be nervous about Chinese dominance of some minerals is beyond me, unless ones definition of "the world" is limited to miners and consumer electronics manufacturers.

Lynas Corp shares soar on China's cuts to rare earth export quotas
The Australian, 29th Dec.

China, which supplies over 90 per cent of rare earths to the world, has cut its quotas on 2011 first-half exports of the minerals by about 35 per cent. The latest reduction follows an earlier decision to cut export quotas by 72 per cent for the second half of 2010.

“It is a re-affirmation of the expressed policy of the Chinese government to continue to husband rare earth resources for use in China and to push the rest of the world to seek alternative development opportunities,” Lynas executive chairman Nicholas Curtis said.

A supply crunch would have its deepest impact on Japanese technology manufacturers such as Hitachi. But it's not uniquely a Japanese problem, notes Hallgarten & Co strategist Christopher Ecclestone.

UK-based Dyson's vacuum motors contain magnets made of neodymium, a rare-earth element, while aerospace companies like Boeing and Lockheed Martin use these materials for guidance systems.

China's decision to cut export quotas is stoking trade tensions with the US less than a month before President Hu Jintao arrives for a visit with President Barack Obama.
"We are very concerned about China's export restraints on rare-earth materials," said a spokeswoman from the US Trade Representative's office, adding that "we have raised our concerns with China and we are continuing to work closely on the issue with stakeholders".

The SMH also reports that demand for these minerals is leading to what would otherwise be called a "stategic alliance" with Burma.

The mineral scramble that led to some rare alliances
Ian MacKinnon, 30th Dec. (sourced from The Telegraph UK)

SOUTH KOREA has struck a deal with Burma to develop its natural resources in the latest bid by industrialised nations to secure new sources of rare earth metals to beat China's near-monopoly.

That South Korea should be doing business with a pariah state such as Burma is a measure of the panic export restrictions have created among big producers of electronic goods. In September Beijing halted supplies to Japan, which takes 60 per cent of its rare earth exports, after a diplomatic spat over the arrest of a fishing boat captain in disputed Japanese waters.

Concern that stockpiles of rare earth minerals could run out by March prompted Tokyo to explore a deal with Vietnam to mine the metals. Beijing denied any official ban on exports to Japan, but figures show it cut export quotas by 72 per cent in the second half of the year. Prices increased sharply.

Chen Jiazuo, a metals research analyst at Beijing Antaike Information Development Company, said the export cuts were ''in line with government officials' comments that we need to protect the environment and resources. Controlling domestic production capacity, output and exports will continue to be the theme.''

Curbing exports may further exacerbate tensions with the US, which last week said it may file a complaint at the World Trade Organisation over restraints on supplies of the minerals.

Yes, let's not restrain USelves.
And in traditional newspaper reporting style I'll include the nerdy interesting details at the end. Wikipedia has a nice page on rare earth elements.

Despite their name, rare earth elements (with the exception of the highly unstable promethium) are relatively plentiful in the Earth's crust, with cerium being the 25th most abundant element at 68 parts per million (similar to copper). However, because of their geochemical properties rare earth elements are typically dispersed and not often found in concentrated and economically exploitable forms known as rare earth minerals.

Due to the relatively gradual decrease in ionic size with increasing atomic number, the rare earth elements have always been difficult to separate. Even with eons of geological time, geochemical separation of the lanthanides has only rarely progressed much farther than a broad separation ...

Mining, refining, and recycling of rare earths have serious environmental consequences if not properly managed. A particular hazard is mildly radioactive slurry tailings resulting from the common occurrence of thorium and uranium in rare earth element ores.[32] Additionally, toxic acids are required during the refining process.[12] Improper handling of these substances can result in extensive environmental damage. In May 2010, China announced a major, five-month crackdown on illegal mining in order to protect the environment and its resources.