Russia May Profit as China Cuts REEs


"China's quotas spark hunt for REE alternatives, which Russia may have."

Russia to benefit from China's REE redux

China's decision to reduce exports of rare earth elements (REEs) shocked the world, but the crisis could be an opportunity for Russia.

In a dramatic move that rattled its trading partners, China announced last year that it would further reduce exports of REEs by 10% in 2011. The decision sent shock waves across the industrialized world as manufacturers are heavily dependent on China for the metals.

Beijing's unilateral quota triggered a hysterical reaction and also prompted a search for alternatives.

The REE crunch, however, may provide Russia an opportunity. Currently, it has almost no REE production; rare earth metals are mostly produced as a byproduct.

In northern Russia, for instance, the Lovozersk integrated mining-and-processing plant (IMPP) mines loparite ores (which contain a wide array of REEs: Tantalum, niobium, zirconium, lanthanum, cerium, etc.) and the Solikamsk Magnesium Plant (SMP) processes those concentrates. But these facilities focus on magnesium production—the REE business is merely auxiliary.

Russia has the second largest explored REE reserves in the world (~30%) and the world's largest anticipated reserves. A good example is the Lovozersk deposit, which consists of three main minerals in about equal shares.

The second gem is the Tomtor deposit in Yakutia, where REE content in ores reaches a phenomenal 12%. Moreover, its proven reserves total 150 Mt., while possible reserves may exceed all global reserves combined.

Finally, another promising source—apatite ore—is mined on a massive scale to produce phosphorus fertilizers. Comprehensive processing of the apatite raw material might produce ~40,000 tons of rare earth metals per year, according to experts.

Unlike fertilizers, REEs are exceptionally expensive and rising, so Russia is well placed to leverage its mining capabilities and infrastructure. Supplying semi-finished products to developed countries might be a good start for establishing an advanced REE production chain in Russia.

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