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Old 11-07-2010, 04:00 AM
Sparty Sparty is offline
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Default China Dominance? | Australia REE, REO, REM Swing Producer 2011

Recently there has been a great deal of media attention directed at the issues surrounding China's perceived dominance of the world's supply of rare earths...

Many articles suggest that China is going to use its position as a weapon or tool for economic dominance...

Here is what I think:

Whether or not "China will not use its dominance of global rare earths supplies as a "bargaining tool" with foreign economies" is probably still open to conjecture.

However China's dominance in the Rare Earths rest with its current processing abilities and not with their resource base. Several countries have large supplies of Rare Earth Elements and in particular Australian companies control over a third of the world's Rare Earth Resources and have substantial quantities of the rarer "Heavy Rare Earths" necessary for the production of powerful magnets used in wind turbines and electric car motors.

Several Australian companies are on the verge of mining their Rare Earth resources and will be producing Rare Earth oxide concentrates by 2011-2012. However China still dominates the output of processed Rare Earth metals that are the actual products used in manufacture.

One Australian company ASX listed Lynas Corp (ASX: LYC) is currently building a processing plant in Malaysia and will become the world's swing "export" producer of rare Earth metals sometime in 2011- 2012. Lynas Corp's Mt Weld project in Western Australia is said to be the world's richest deposit with a pleasing amount of the heavy Rare Earths.

The USA's Molycorp who operate the rich Mountain Pass resource may also come into processed metal production in 2012 - 2013. But it seems unlikely that they will be allowed/permitted to export the processed materials in the midst of a supply shortage with rich political/strategic implications.

Australian ASX listed companies control several other rich Rare Earth deposits with advanced mining projects and when taken together these show Australia to be richly endowed both here in Australia and overseas. On a population to resource metric Australia (via Australian ASX listed companies) is very well endowed and is probably the world's second richest country in terms of Rare Earths per capita.



ASX listed Greenland Energy and Minerals (ASX : GGG) controls the world's largest Rare Earth deposit, Greenland's Kvanefjeld deposit that whilst of relatively low grade is extremely large and rivals some of China's largest deposits. Greenland has a population of ~65,000 people.

It seems the race will be won by the companies that will be amongst the first to produce the processed Rare Earth metals for supply to Asian manufacturers and on the current evidence this places Lynas Corp in an extraordinary position as the world's swing supplier in 2011-12.

www.AustralianRareEarths.com
is a primer on Australian Rare Earths and has been written with Australian investors in mind.

 

Disclaimer: The author of this post, may or may not be a shareholder of any of the companies mentioned in this column. No company mentioned has sponsored or paid for this content. Comments on this forum should never be taken as investment advice.

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