Benjamin Stupples and Agnieszka De Sousa report that rare earth minerals are not so rare anymore, thanks to China. Chinese exports of the minerals doubled in July from a year earlier, reaching the highest level in more than four years, according to government data. Shipments advanced after the country last year scrapped its 15-year-old export controls, and then in April removed a tax on ore shipments.
The group of 17 rare earths are used in everything from smart phones to electric cars to cruise missiles. China still accounts for more than 80 percent of global production, primarily because it can price out most other producers. This trend has been brewing for some time, said Kevin Starke, an analyst at CRT Capital Group in Stamford, Connecticut. It is because of the termination of the export quotas. If there is less demand for rare earths in China, as ostensibly there is, that resource is going to leave the country. Those factors are all conspiring. Rare earth prices have been slumping along with other commodities and the rout is poised to deepen, according to Starke.
China is the biggest user of raw materials and the Chinese economy is expanding at the slowest pace in a quarter of a century. Prices for neodymium oxide, found in magnets, and praseodymium oxide, used in lasers, are at the lowest price in more than four years. Lanthanum oxide, used in hybrid-car batteries, and yttrium oxide, which goes into microwave filters, are at the lowest price since at least 2010. The price collapse has already claimed some victims. Molycorp Inc., a U.S. producer of rare earths, filed for bankruptcy protection in June having run out of cash but they are still operating and stock piling materials for a better time.
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