China's REE Stranglehold Is Canada's Opportunity


"China's export quota could be opportunity for Canadian miners"

News of China's export ban on REEs has raised alarms around the world, and in Canada, though it won't be impacted nearly as severely as the U.S. and other countries with more developed manufacturing sectors.

The move could even prove to be a boon to Canada's mining sector as countries around the world seek alternative sources of these critical metals.

China controls 95% of the world's production of REEs after years of underpricing international competitors and forcing them out of business. But with other countries no longer operating REE mines, these new restrictions could force companies depending on the metals to move production to China in order to access the necessary metals.

Even that may not be enough though, as the regime indicated it will favor domestic companies over foreign.

While the U.S, EU and Japan are deeply concerned about the move, Canada doesn't face the same level of exposure due to its relatively small manufacturing sector and limited REEs, according to a Natural Resources Canada spokesperson.

However, those restrictions could present an opportunity to Canadian miners as nations look to source their metals elsewhere.

Avalon Rare Metals Inc. (TSX:AVL; OTCQX:AVARF) owns an advanced-development-stage project, Nechalacho REE Deposit, located in the NW Territories. The company said it believes Nechalacho is one of the highest-quality undeveloped REE deposits in the world.

Natural Resources agrees and lists it along with Great Western Minerals Group Ltd. (TSX.V:GWG; OTCQX:GWMGF) and Quest Uranium and projects in their advanced states, though still some distance from actual production.

"These exploration properties, while showing positive mineral results, provide no certainty of economic viability and are minimally at least three–five years away from production," said Natural Resources.

"Canadian officials are monitoring the situation and are actively engaging the Chinese government on this issue," says Department of Foreign Affairs and International Trade Spokesperson Jennifer Chiu.

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