[Image courtesy of www.seekingalpha.com]
China Direct's Washington DC office recently gauged the mood amongst business and academia at a Rare Earths Event at the Centre for Strategic & International Studies (www.csis.org).
This is what they ascertained:
David Sandalow, Assistant Secretary for Policy and International Affairs, US Dept of Energy, presented highlights from the recent DoE report, Critical Materials Strategy 2010 (executive summary attached below):
- Rare earth material are not rare. They can be found all over the globe. However, China currently represents 95% of production.
- MolyCorp’s Mt. Pass mine in California just got its permits and should start producing in 2 years.
- Short term there is a risk of supply disruption for a few specific elements.
- Long term there will be an increased demand for rare earth materials but there will also be breakthroughs in technology that will allow man-made substitutes to be used.
- Rare earth materials only represent a small fraction of the total cost of many products (esp. Cars). Therefore a price rise in materials will not greatly raise the overall cost of the product. This situation will not send the necessary market signals to investors to increase domestic production.
The second panel consisted of rare earth investment consultants Anchor Group, the Chief Scientist for materials from GE, and the DC Rep of Japan Oil, Gas and Metals National Corporations (JOGMEC).
- China controls the rare earth market for at least the next five years.
- Significant disruptions to the US supply chain of rare earth by 2012 is highly likely.
- Many end users do not realize that they will soon face a rare earth minerals problem.
- Man-made ‘material substitution’ could reduce end users' dependence on rare earth by 80%, recycling could add an additional 10%.
- China’s export quotas of rare earth have increased by 40%-70% over the past year.
For an Executive Summary please click below:
Download Critical_Materials_Summary (2)
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