The increase in certain rare earth element (REE) prices in H1 2017, particularly for neodymium (Nd) and praseodymium (Pr) products, has brought renewed interest to the rare earths industry after prices stagnated in 2016. China FOB Nd oxide and Pr oxide prices increased 20% to US$48.4/kg REO and 21% to US$61.5/kg REO respectively between January and July 2017, whilst Chinese domestic prices for the same products increased by 23% and 24% during the same period.
On the supply side there have been a number of developments in 2017, which have helped support prices increases. Chinese rare earth mining and production quotas reported by the Ministry of Industry and Information Technology remained unchanged, though environmental inspections during Q2 disrupted production at some rare earth production and processing facilities. The supply disruptions led to a tightening of supply to the domestic spot market which has extended into July. The Chinese State Reserve Bureau undertook three stockpiling campaigns in H1 2017 totalling 6,400t REO, though only one campaign was partially accepted by producers supplying 1,665t REO, suggesting producers expect prices to increase further during 2017.
Outside of China, Lynas Corporation continued to increase production of Nd-Pr oxides to 2,716t in H1 2017, whilst India Rare Earth Limited continued to experience difficulties in ramping-up production of mixed rare earth chlorides. China is expected to continue its dominance of REE production, though other producers are moving closer to commercial production. In H1 2017, Peak Resources released a DFS for the Ngualla project in Tanzania, Northern Mineral began construction of a pilot-scale plant in Australia and Rainbow Rare Earths raised finance and began renovation of the Gakara Mine in Burundi, targeting production of REE mineral concentrates by end-2017.
The forecast increase in demand for magnet materials, primarily NdFeB magnet alloys, used in renewable energy turbines, HEV/EVs and other industrial uses has focused attention on the supply availability of REEs. Despite the focus on vehicle electrification, Chinese domestic EV production fell in H1 2017, as subsidies for EV products from the Chinese government were removed in 2016. Subsidies were reinstated in 2017, though with more stringent parameters and have failed to cause a quick recovery in EV production numbers. Demand for REEs in catalysts has shown a mixed picture in 2017, with consumption in FCC catalysts being affected by OPEC’s decision to limit output and the growing use of light oil in North America, whilst sales of auto catalysts increased by 10% in Q1 2017 supporting demand for cerium and lanthanum compounds.
While some REEs have shown significant prices increases in H1 2017, China FOB yttrium oxide prices have fallen by 10% and China FOB dysprosium prices displayed a 4% fall. Decreasing demand for yttrium in phosphors, the reduced intensity of use of dysprosium in magnet alloys and notable oversupply for both products in China, have contributed to the price reduction.
Roskill’s Rare Earths: Global Industry, Markets & Outlook report will be published in October 2017.