Australian Rare Earth Elements- Issues

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"There is oil in the Middle East; there is rare earth in China…." That same year, the State Council approved the establishment of the Baotou Rare Earth Hi-tech Industrial Development Zone. During his 1999 visit to Baotou, President Jiang Zemin wrote, "Improve the development and applications of rare earth, and change the resource advantage into economic superiority." Then President Jiang repeated the strategic importance of developing China's rare earth industry, which has caught worldwide attention.

"The reason why rare earth, a small industry with annual consumption of only 75,000 tons REO and a market value below US$100 million, has been given attention by Chinese leaders at all levels is due to its uses in modern hi-tech industries because of its special chemical and physical properties As a matter of fact, rare earth has been listed in the category of strategic elements in many countries, such as the USA and Japan. Some experts predict technological innovation with the global development and application of rare earth." Read more

China's rare earths

The solution to this current problem of Chinese dominance probably lies within several Australian companies with substantial (JORC) Rare Earth Deposits. The problem is that Australia's Rare Earth Companies have miniscule market caps (below $100m) and consequently are very vulnerable. One Australian company Arufura resources (ASX Code: ARU) has already seen China based interests take a major stake, however the tide to China's world wide dominance of the REEs supply chain might be turning with Australia's Foreign Investment Review Board (FIRB) (October 09) rejecting a 51% bid by China Non-Ferrous Metal Mining (CNMC) that would have seen the world's richest deposit Mt Weld* held by Lynas Corp's ASX: LYC with CNMC as its majority shareholder. The heat is now on for another very large Australian held deposit by Greenland Energy and Minerals ASX: GGG in Greenland where much political manouvering is currently occurring.

Consequently Australia may well become the world's swing producer of Rare Earth Elements in the near future and could even break China's dominant supplier position, if our Australian investment community begins to provide support. This was an unlikely scenario a year or so ago but recently two major factors have emerged:

Australian companies hold almost as much if not slightly more rare earth elements resources as does China.
And now that countries like Korea, Japan and the USA have suddenly woken up to the fact that their ticket to the 21st century's "electron-economy" is going to be clipped by access to REEs (especially the heavy REEs) China is no longer in the position of killing off their competitors by dropping supplies to below cost of production (and have even started to impose export bans and tariff's).

Clearly the race is on, we almost lost a lot of ground during 2009 and we can only hope that the Australian and International investing public are watching and perhaps the Australian Govt. could help with a "flow through share relief scheme".

This article outlines aspects of REEs as viewed by China.

The slide below will probably suprise you....
Rare earths by country

Update: New resource statement 18th june 2009 confirms Kvanefjeld as one of the largest rare earth resources in the world at 4.79mt REO.

The data above could be several months out of date and it is quite difficult to acquire the underlying data. Nonetheless Australia probably now has over 50% of the World's mineable REE deposits.

Read Jack Lifton's view of the REE "war"

It Seems that Jack Lifton has spotlighted an emerging hot issue according to this - The Financial Times' article: China’s rare earth monopoly threatens global suppliers, rival producers claim

China Policy on Rare Earth Update: China further tightens Rare Earth Production and Exports

Mt Weld REE composition