Tuesday, 30 July 2013

Findings From the Recent IHS Rare Earth Minerals Report

Back in May of this year, China tightened the Rare Earth export quota due to a wane in demand (read our blog post covering this story here) which inevitably led to a price increase.

IHS have conducted a report looking at the opportunities and threats for Rare Earth Minerals, their findings show a positive forecast for growth, demand and pricing.

In the years leading up to 2009, China was the largest supplier of Rare Earth Minerals. In 2010 prices began to increase substantially and by the middle of 2011, they were up by 10 or 15 times the 2009 market price. This increase in price was due to the Chinese Government decreasing the export quotas and applying heavy tariffs. China also forced the closure of many small and illegal mining companies to help preserve the environment.

With Rare Earth Minerals being an essential component in many industries, we need to try and understand if another crisis like this will reoccur.

Looking forward to 2017, IHS forecast that the total world demand will increase from 110,000 to 160,000 metric tons. On the supply side, the current total world capacity for Rare Earth is estimated at 141,000 metric tons, with 70% of that installed in China.

However the situation looks positive, with Australia and the US starting up production in late 2011 and making up 21% of the worlds available mining capacity, IHS believe that by 2017 there could be 350,000 metric tons of available capacity. Which is an increase of 200,000 metric tons per year from 2012.

China is predicted to remain the major producer, but a large portion of its share could be reduced and transferred to other producing countries, those who previously had the capacity to produce, but gave up due to decreasing prices or environmental issues.

Along with these increases in demand and capacity, it is also believed that we will see a more stable price, with no expected pricing spikes as Rare Earths will become more available. With stable pricing comes an improved supply chain, with reduced risk, a reduction of tightness on supply and less reliance on China.

So overall the Rare Earth Minerals market is predicted to remain stable, with improvements being made and costs remaining steady over the next few years.

To watch IHS' free webinar discussing this report, please click here.

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