China’s dominance over rare earths supply could be challenged in the coming years as investors pour money into exploration prjects outside China, says the CEO of Canadian rare earths miner Quest Rare Minerals.
Ultrapure Cerium
“China’s intentions to control exports have forced non-Chinese consumers to look for alternative sources,” Peter Cashin told CNBC’s "Cash Flow" on Tuesday.
China currently controls around 95 percent of the world’s rare earths market, but the flood of investment in international projects has seen production outside China ramp up.
U.S.-based Molycorp has been increasing its rare earth production as part of the $895 million modernization and expansion of the Mountain Pass project in California. While Australia-listed Lynas is targeting first production from its Western Australian Mount Weld project this quarter.
Quest Rare Minerals also expects to start production in the coming years to feed this rising demand. The miner is currently developing several rare earth projects in Canada, including the Strange Lake project, which is North America’s largest deposit of heavy rare earths. Cashin is targeting 2017 as the startup date for production at the Strange Lake project.
Heavy Rare Earth Elements are in higher demand than the Light Rare Earths, as they can be used in more heat-resistant applications, and Cashin expects demand for Heavy Rare Earths to stay strong in the long run.
“The Heavy Rare Earths, in particular, will be in short supply even out to 2025,” Cashin said, adding that he expects China to become a net importer of Heavy Rare Earth Elements by 2015.
Rare Earth prices have corrected this year following a spike on the back of China’s efforts to curb exports in 2011.
But Cashin says prices of the Heavy Rare Earths haven’t corrected as much as the Light Rare Earths, which points towards the fact that long-term demand is intact.
Rare earth minerals are commonly used in high-tech manufacturing, from smartphones to electric cars.