Caution, Rare Earths Ahead


". . .at any time, some rare earths are in surplus, others in deficit."

In recent years plenty of fingers were burned by the uranium and phosphate frenzies, and there is a danger that we could be in for a repeat with rare earths. This is not helped by the fact that they are one of the most complex and difficult to understand of the mineral stories.

So here are some details from an overview of the rare earths market compiled by Dudley Kingsnorth, executive director of the Perth-based Industrial Minerals Co. of Australia and former project manager on the Mt. Weld rare earths project in Western Australia.

The 2008 world market amounted to 124,000 tons of rare earth oxides, worth about $US1.25 billion. In 2009, however, the demand fell to 85,000 tons following the global financial crisis.

The problem for the rest of the world is that, while China supplies 95% of its rare earths needs, that country has put in place various measures to ensure that these elements are processed inside the country rather than exported. So we need to find sources outside China, but just how many mines are needed? It may not be as many as some bullish investors may think.

USGS figures put total world reserves at 88 million tons. Of that total, Australia accounts for 5.2 million tons, China has 22m tons, the former Soviet Union has 19m tons and the U.S. has 13m tons.

The Perth rare earths expert is now expecting 2015 demand to total 197,000 tons.

One problem is balance in the market; at any time, some rare earths are in surplus, others in deficit.

The estimate for the position in 2015 is that three rare earth elements will be in short supply: neodymium will be the most notable supply crunch, along with terbium and dysprosium. Kingsnorth says that europium supply (used for the red color in TV and computer screens), erbium and yttrium will be "tight."

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