Rare earths: Flooding affects China LREE production

Rare earths supply

Recent Yangzte flooding in southern China is serious and affecting many metal industries including Rare earth productions. The heavy and consistent rain storms in mid-August have heavily impacted Leshan in Sichuan province, causing damage, material loss and production disruption at metal producers in the region. Roskill believes that two rare earth smelters & refineries and at least one relevant catalyst manufacturer became flooded during the storms; these were Leshan Shenghe Rare Earth, Runhe Catalyst New Material, and Leshan Ruifeng Metallurgy. The three plants are located only a few Kilometres away from Minjiang, a key tributary to the Yangzte river.

Roskill View

Leshan Shenghe and Leshan Runhe Catalyst are both assets of Shenghe Resources and rely on Shenghe for raw material feedstock. Leshan Shenghe is a key production base for light rare earths (LREEs) in China, processing feedstock mainly from Shenghe’s core Chinese mining asset, Sichuan Dalucao. Leshan Shenghe’s production increased to over 7.5ktpy REO in 2019, owing to Chinese government deregulation on LREEs and increasing LREE quota. Leshan Runhe Catalyst, located nearby, has the capacity to produce 50ktpy of catalyst and molecular sieves.

Leshan Ruifeng, a JV led by Jiangxi Copper (JCC), is located 8.5km north of Leshan Shenghe, with 7.5tpy capacity for rare earth chlorides and a separation capacity of 5.5ktpy REO. Feedstock for the plant is sourced mainly from JCC’s Maoniuping mine, as well as imported as ore concentrates from Mountain Pass in the USA via Shenghe. Total output of LREE at the two refineries was reported to be over 10kt REO in 2019.

The Maoniuping (JCC) and Dalucao (Shenghe) mines, which supply feedstock to the facilities, are located in Dechang, Sichuan – a major hub for bastnaesite mineral ore production in China which reported approximately 40ktpy REO production capacity for LREEs in 2019. The flooding which impacted the processing facilities, however, has not impacted the two mining areas, where ordinary operations have continued.

According to a public announcement by Shenghe, over 7kt of raw material feedstocks and finished products, as well as key operating equipment, were damaged by the floods. Though the flood waters have now receded, work required to repair equipment, water and electricity supply is on-going. It is still too early to assess the total disruption to LREE production at the Shenghe facility, though LREE prices have increased in the short-term, amidst fears of short-term supply shortages.

Roskill will publish its Rare Earths: Outlook to 2029, 20th Edition report in December 2020, which includes three updates that provide you with up-to-date supply, demand and price forecasts, along with profiles of major producers, processors and end-uses. Click here to download the brochure and sample pages, or to access further information.

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This article was written by Leslie Liang. Please get in touch below if you wish to discuss further:

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