Rare metal prices rise as China restricts exports

Last year, China announced that it will impose export restrictions on eight gallium and six germanium products starting in August 2023 in retaliation for the US imposing trade restrictions and tariffs on Chinese-made products. On August 14, Beijing tightened the noose and announced restrictions on antimony exports as part of the country’s latest move to restrict shipments of the critical mineral. And now antimony and gallium prices are growing despite the fact that the export restrictions are yet to come into effect. Antimony prices have hit an all-time high, with spot prices in China and Europe topping $25,000 a tonne, prices more than double at the end of 2023.

Source: Financial Times

China is the world’s largest producer of antimony, accounting for 48% of global mined production. The country’s production in 2023 was 40,000 tonnes, almost double Tajikistan’s 21,000 tonnes, while Turkey was the third largest producer with 6,000 tonnes. Antimony is considered a strategic metal used in military applications such as ammunition, infrared missiles and nuclear weapons, as well as lead-acid storage batteries used in cars and brake pads due to its heat-resistant properties. Antimony is also widely used in the solar sector to improve the transparency of solar cell cover glass and is also used in smartphone screens.

“It is a sign of the times. Military uses of Sb (antimony) are now the tail wagging the dog. Everyone needs it for weaponry, so it’s better to hang onto it than sell it. This will put real pressure on the US and European militaries,” Christopher Ecclestone, principal and mining strategist at London-based Hallgarten & Company, told CNN shortly after Beijing announced restrictions on antimony exports.

Not surprisingly, rare metal stocks (manufacturers fly: Hunan Gold Corporationn, one of the largest antimony producers, has seen its shares gain 35% year-to-date, while those of Perpetual Resources they have almost tripled in the last six months.

Flood of rare earths

Beijing has done everything in its power to maintain its rare earth hegemony Chinese manufacturers are flooding the markets with rare earths and battery metals such as lithium. This inevitably led to prices collapsing, thus making it untenable for emerging Western competitors to continue operations. In other words, lithium carbonate prices they collapsed at CNY 75,000 ($10,530) per tonne, well off their 2022 peak of ~CNY 590,000 ($82,850) and the lowest in three years amid growing oversupply concerns. Meanwhile, in Q1 2024, NdPr oxide prices fell 47% y/y; Dysprosium prices fell 20%, while terbium prices fell 52%. NdPr – an acronym for Neodymium-Praseodymium – is used to produce the world’s strongest and most efficient magnets; dysprosium is used to make alloys for neodymium-based magnets, while terbium is used in solid-state devices to dope calcium fluoride, calcium tungstate, and strontium molybdate.

Last year, China issued three batches of rare earth production quotas, the first time it issued so many quotas in a single year since the quota system began. The total quota for 2023 reached a record 255,000 tonnes, good for a staggering 21.4% Y/Y growth. Since 2006, Beijing has controlled its supply of rare earths through the quota system.

“China is determined to maintain its market dominance. This is now a race,” Don Swartz, CEO of American rare earths (ARR.AX), told Reuters.

In response, miners from Australia to Canada have been forced to cut production, withdraw investment plans and initiate layoffs. Even larger producers such as the Las Vegas, Nevada-based rare earth miner MP materials (NYSE:MP) and its Australian counterpart Lynas Rare Earths (OTCPK:LYSCF) (OTCPK:LYSDY) can hardly wait, and their shares have been tumbling.

News supply chains

Fortunately, rare earth producers in the West are still fighting back: China’s Rare Earth Resources and Technology saw its 2023 fiscal year decrease in net profit up 45.7% to 417.67 million yuan due to pressure from future western supply chains. A similar trend is seen this year, with the company reporting that Q1 2024 revenue fell 81.9% to 301.55 million yuan, leading to a net loss of 288.76 million yuan, versus of a net profit of 108.97 million yuan in the same period. a year earlier.

China Rare Earth Resources pointed out that “foreign countries are now proactively setting up rare earth supply chains independent of China,” highlighting efforts from places like the US, Australia and Southeast Asia.

Some western countries are rich in rare earths. In other words, the Nordic countries, particularly Greenland, Norway, Sweden, and Finland, have large deposits of a variety of rare earth elements, including cobalt, nickel, lithium, and graphite and nickel, that remain largely untapped. right Nordic Council of Ministersthe northern bedrock hosts over 43 million tons of economically viable deposits of rare earth minerals. Finland, Sweden and Norway are among them the first eight favorable countries for supply chain development of critical minerals and batteries, according to Bloomberg New Energy Finance.

By Alex Kimani for Oilprice.com