Rare earths: Myanmar’s border to China recloses

Rare earths supply

Roskill understands that some Chinese producers and operators in Myanmar have been asked to head back to China after the border between the two countries closed once again in mid-December. The border had recently reopened in October following a “permanent closure” in May 2019, making this the third switch within the year. Currently, rumours are that the most recent trade ban across the Yunnan border is being driven by the authorities on the Myanmar side, with the stated initial aim of environmental protection and remediation.

Roskill View

According to communications between Chinese rare earth traders and Myanmar mining operators, once again there are no signs of the border reopening soon. Again, no official announcements have been made regarding the border.

Shipments of rare earth between China and Myanmar have never been recognised as “legal” trading, with all deals being settled in RMB via third party agents. The agent fees, including various border charges, have risen significantly since the October reopening of the boarder, which has led to increasing raw material costs. In addition, the deposits of Myanmar’s heavy rare earth mineralisation are thought to be more unstable compared to many deposits in southern China – in situ leaching has caused significant soil contamination and collapsed mining adits, both leading to very low recoveries of rare earths and, in turn, higher operating costs.

The volume of heavy rare earth compounds delivered from Myanmar to China is estimated to have accounted for over 16% of global rare earth oxide (REO) equivalent supply in 2018, but the closure of the border has seen supply from the country decline 28.7% year-on-year in 2019. Roskill forecasts a further decrease in 2020. The existing rare earth compound stocks from Myanmar are unknown, but according to some market participants approximately 1kt REO was delivered into China during the late-October to mid-December period.

The closure of the border focusses attention on heavy rare earth supply, especially the elements dysprosium (Dy) and terbium (Tb), as the suspension of southern China’s rare earth operations shows no sign of reversal. Spot prices of Dy and Tb have oscillated in line with the opening and closing of the Myanmar border as supply of these low-volume elements quickly tightens. Roskill expects that significant stocks (including from illegal supply) of mixed and separated compounds are still held by major SOEs and that supply availability will be able to account for 2020 demand. Many of the other separation plants, however, may face growing shortages of feed as we enter the New Year and supply tightens once again.

Roskill’s 19th edition of the Rare Earths: Outlook to 2029 report will be published soon. A subscription (which includes the report, three updates throughout the year and access to the analysts) provides up-to-date supply, demand, trade and price data for all the rare earth elements, along with ten-year forecasts, profiles of the major producers and processors, and a detailed breakdown of the major end use applications. Click here to download the brochure and sample pages for the report, or to access further information.

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

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