China’s move to raise rare earth production to weigh on global prices, deal blow to projects in US, Australia
- As China raises its annual mining quota for rare earths to a record high, this could potentially push companies in other parts of the world into a tight corner
Surging rare-earth production in China is presenting a new challenge to budding efforts in the US and elsewhere to undercut the Asian giant’s dominance in a market for exotic materials used in everything from smartphones to fighter jets.
China said this month it’s raising its annual mining quota for rare earths to 132,000 tons, 10 per cent above last year’s record high. It’s a move likely to weigh on global prices, dealing a blow to rivals including the US and Australia, countries that agreed just last week to jointly accelerate new projects in a push to diversify the supply chain.
If you’re reading this story on a smartphone, you probably have China to thank for it. The Asian nation generates about 70 per cent of mined rare earths and controls 90 per cent of a US$4 billion global market for materials used in magnets and motors that power phones, wind turbines, electric vehicles and military hardware.
With the US and China locked in trade talks, there were fears China may restrict access to the materials. Instead, it is bulking up, potentially pushing companies elsewhere “into a tight cash situation” just as they seek to invest in new projects, said Ryan Castilloux, managing director at critical metals consultancy Adamas Intelligence.
In the US, that puts a target squarely on MP Materials, which runs America’s lone operating rare-earth mine, Mountain Pass in California. The site, which sits less than an hour’s drive from the gambling dens of Las Vegas, resumed sales last year after being mothballed in 2015.