China’s rare earth restrictions shake global markets

By Metal miner

The Rare Earths MMI (Monthly metals index) managed to reverse and pull up 8.66% after experiencing constant declines since May. Numerous parts of the rare earth index reversed price action, including neodymium and terbium oxide. China’s recent crackdown on rare earth supplies caused a shift in the global market, creating significant near-term bullish sentiment, with trends covering weekly in the MetalMiner newsletter.

China’s crackdown on rare earths causes price spikes

In recent months, China’s crackdown on rare earth minerals and its broader tightening of regulations have sent ripples through global markets. China has long dominated the rare earth market, producing about 90% of the world’s refined rare earth output. This dominance allows Beijing to wield significant influence over global supply chains for critical minerals such as neodymium, praseodymium and dysprosium, vital elements for magnets used in everything from electric cars to wind turbines.

One of China’s main centers for rare earth production, Jiangxi, is among the provinces that have led a four-month campaign against illegal mining activities. While crackdowns on illegal mining benefit the market in the long run, they too lead Above rare earth prices short term.

The supply-demand crisis

Many expect the demand for rare earths to continue to grow with the push for green energy. In fact, some analysts are predicting a mismatch between supply and demand due to this continued global growth. China’s recent actions to crack down on illegal mining and tighten regulations have put new pressure on the global REE market.

Some analysts predict that the rare earth market will shift from a surplus to a global deficit by the end of 2024. A smaller number also anticipate a potential global shortage of 800 metric tons of NdPr, a critical component of magnets permanent, until the end of the year. Meanwhile, China’s decision to reduce production quotas for rare earth elements will likely widen that gap as well they push prices higher.

The US defense sector is at risk

China’s restrictions on the export of rare earth processing technologies have also caused supply chain problems for defense contractors, making it more difficult to secure a reliable source of materials. Businesses such as Raytheon and Lockheed Martin need rare earth elements for fighter jets, radars and missile systems. Aware of this vulnerability, the US Department of Defense has warned of the national security risks of heavy reliance on Chinese rarely EARTH.

What US companies can do to reduce risks

While dependence on China’s rare earths presents challenges, American companies have options to reduce their exposure and prevent financial losses.

For starters, American companies need to expand the diversity of their supplier networks. Nations such as Australia, Brazil and Canada also hold significant reserves of rare earths and continue to ramp up production. In recent years, companies such as Lynas Rare Earths in Australia have become key alternative suppliers, particularly for neodymium and praseodymium.

Meanwhile, the US government continues to actively encourage domestic production of rare earths to reduce reliance on Chinese suppliers. MP Materials, which operates the Mountain Pass rare earth mine in California, is playing a key role in this effort. The US Department of Defense has also invested in building local rare earths processing plants to ensure that the country can supply these resources domestically.

Another strategy involves recycling rare earth elements from end-of-life products. Although rare earth recycling technology is still in its early stages, it has significant potential as a long-term solution to supply chain challenges. Companies in industries such as technology and automotive that handle large volumes of products containing rare earths can benefit from investing in recycling infrastructure to recover these valuable materials from the past. electronics and vehicles.

By Jennifer Carey

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