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Rare earth prices soar China gradually expand industry influence
Release time:
2017-08-16 13:42
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In 2017, with the further consolidation of China's rare earth industry, rare earth prices rose steadily.
Since the beginning of the year, the average price of the iconic rare earth product praseodymium neodymium oxide has risen 43%. The product's rise has accelerated significantly since June, contributing more than half of the increase in less than two months.
The share prices of A- share counterparts have also risen significantly. Since June, the northern rare earth has risen 31%, and the rare earth permanent magnet plate has risen 16.4.
Chinese rare earth companies are also exploring overseas resources. On July 11 this year, Shenghe Resources announced that the joint asset purchase agreement for the overseas rare earth mine Mountain Pass, which is located in California, USA, has been approved.
Americans seem to be more afraid of China's influence in the field of rare earths. U.S. media reported that the head of U.S. elements met with Trump strategist Bannon on Monday to persuade him to MountainPass was nationalized because the rare earth mine had military use.
Rare earth crackdown continues to deepen
The rise in rare earth prices since June has something to do with the rare earth crackdown since the end of last year.
In 2010, there was a surge in rare earth prices. But after that, affected by the industry overcapacity and illegal production, rare earth market prices fluctuated downward. Since 2011, rare earth prices have recovered about 80% from their highs.
In order to maintain the normal production order of the industry, the Ministry of Industry and Information Technology jointly launched a special governance action for the rare earth industry in December 2016.
In June of this year, the Rare Earth Office of the Ministry of Industry and Information Technology established to rectify the order of the rare earth industry, and planned to normalize the crackdown on illegal production of rare earths. At the same time, Guangxi, Jiangxi, Shanxi and other places have also promoted special actions to combat rare earth violations.
The previous rectification was mainly illegal enterprises other than the six major groups (Chinalco, Northern Rare Earth, Xiamen Tungsten, China Minmetals, Guangdong Rare Earth, Southern Rare Earth). In fact, some smelting and recycling enterprises under the six major groups also illegally used rare earth raw materials. The Economic Daily said that the rectification will include six major groups and will strictly control the smelting and recycling enterprises under the group.
Middle East has oil, China has rare earths
Deng Xiaoping mentioned during his southern tour in 1992 that there is oil in the Middle East and rare earths in China.
According to data from the U.S. Geological Survey (USGS), as of 2016, the global rare earth mineral reserves were about 0.12 billion tons, and China's rare earth mineral reserves were 44 million tons, accounting for 36.67 percent of the world's reserves, ranking first in the world.
Although China's rare earth reserves rank first in the world, they are far from exclusive. However, in 2016, the global production of rare earth was 126000 tons, and China contributed 105000 tons, accounting for 83%.
Societe Generale research points out that by dividing global rare earth reserves by production in 2016, the ratio is close to 1000. This means that in the case of insufficient exploration, the existing rare earth can be mined for nearly 1000 years, which also shows that rare earth is not scarce. China's influence on global rare earths is more focused on production than reserves.
Moreover, Chinese rare earth companies are still exploring overseas resources. On July 11 this year, Shenghe Resources announced that the joint asset purchase agreement for overseas rare earth mine MountainPass has been approved. The mine, located in California, was once the world's main source of rare earths. But after 2000, as China's cost competitiveness of rare earths became stronger and stronger, MountainPass gradually lost its competitiveness.
Is America in a hurry?
US media reported that the head of American Elements (AmericanElementsCorp.) met with Trump's chief strategist Bannon on Monday to persuade it to nationalize the MountainPass because the rare earth mine has military applications.
The person in charge said that the MountainPass mine that Shenghe Resources won the bid should be transformed into a state-owned laboratory dedicated to rebuilding the U.S. rare earth mining industry to prove that the U.S. also has the ability to build high-tech factories.
From the downstream application of rare earths in the research and finishing of Societe Generale, nearly half of the rare earths are used in the permanent magnet industry. The permanent magnet industry's most important raw materials, it is the iconic rare earth products praseodymium neodymium products.
At present, rare earth permanent magnets are widely used in new energy vehicles and other fields. In the first half of the year, the output of rare earth permanent magnet enterprises generally increased by 10%-30%. Rare earth permanent magnets are also the raw materials for key components of military equipment such as missiles and weapons. As mentioned earlier, because China contributes nearly 90% of the world's rare earth production, this is what worries Americans.
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