Notes from a flagging industry? China's Rare Earth Association takes stock

By Siobhan Lismore-Scott, Albert Li
Published: Wednesday, 30 March 2016

China's Rare Earth Association's sixth annual market seminar was a sombre affair, however some positive indicators were highlighted over the course of the event.

The mood was sombre at the China Rare Earth Association's sixth market seminar, held last week in Beijing, as the ravages of another tough year in the sector were revealed, the most concerning of which was a 15% decline in the average price of rare earths in 2015. 

Overall, China's rare earths industry had a deficit of nearly Chinese renimbi (Rmb) 800m ($123.6m*) last year, with most companies facing having to either halt production temporarily or shut down completely. Few businesses remain profitable. 

According to one industry source, five of the biggest six rare earth companies in China recorded a deficit last year. The sixth company only made a slight profit, attributed to the fact it processed its waste materials, which were exempt from a government-levied resource tax.

According to Zhongshan Wang, technical advisor of the alloy branch in the China Rare Earth Association, the biggest issues facing suppliers are the bearish market and overcapacity.

China's rare earth production of 110,000 tpa can satisfy both domestic and export demand outright, but in recent years, production has outstripped demand, leaving a "huge" inventory surplus, delegates at the Beijing meeting were told.

Smaller companies and rare earths traders have exited the industry altogether, by choice or force. 

However, there is still some hope of a recovery in rare earths, according to Anwen Zhang, the association's vice secretary, who cited a boom in manufacturing of next generation energy applications and new materials, which could offer rare earths producers a chance to tap higher revenues, providing they can upgrade their operations and transition to new products.

He added that he believed rare earths were often irreplaceable in applications and named a number of markets in which rare earths consumption is expected to grow in the future. These include exhaust gas purification and waste treatment in energy saving industries, as well as in high speed railways.

The developing robotics industry also has a rising need for rare earths, especially in welding and carrier robots. By the end of the 13th Five Year Plan, which runs from 2016-2020, industrial production of Chinese robots is expected to be valued at Rmb 10 trillion ($1.53 trillion).

Albany Wind Farm_Lawrence Murray  
Wind turbines are a source of renewable energy which use rare earths, but the applications are expected to grow (source: Lawrence Murray, Via Flickr).
Rare earths constitute the 15 lanthanide elements in the periodic table, plus yttrium, a naturally associated mineral. 

These are relatively abundant in the Earth’s crust, but do not often occur in minable concentrations.

World resources are contained primarily in bastnaesite and monazite ores. Bastnaesite deposits in China and the US make up the largest percentage of the world’s rare earth economic resources, while monazite deposits constitute the second largest segment. 

Apatite, cheralite, eudialyte, loparite, phosphorites, rare-earth-bearing (ion adsorption) clays, secondary monazite, spent uranium solutions and xenotime make up most of the remaining resources. 

*Conversions made March 2016

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