Report claims China fibbing over rare earth production

A report on China’s rare earth materials has argued that the country producing far more than has been officially stated – while quota restrictions raise prices for components.

The report by rare earth expert Garth P. Hatch of Technology Metals Research LLC has estimated that China has produced 89,200 metric tonnes of rare earths last year.  This is a substantially higher figure than the official total of 89,200 metric tonnes.

This means that China accounts for even more than the 96 percent of global output that is reported, according to the Wall Street Journal.

Hatch claims that quotas put in place by Chinese authorities to limit production have little actual effect on production, with output “driven by overall demand for these materials, within China and in the rest of the world, not the export quotas.”

This is something echoed by the European Union which has previously expressed to TechEye that the strict quota’s, ostensibly for environmental reasons, are unfairly put in place in a bid to retain its control.

With China having such a tight hold on the valuable earth materials there has been an “explosion” of projects across the world to move production elsewhere.

In the report Technology Metal tracked 381 projects outside China and India, being developed by 244 companies in a further 36 countries.

Australia, South Africa, Alaska, Canada and Sweden are considered to have the leading mines in terms of quality outside of China.

It is expected that as more mines come online global output should rise and reduce reliance on China.  The report estimated global production to hit 163,458 tonnes by 2013 and 327,244 by 2017.

In terms of when specific materials will come into surplus leading to supply in the following time frames:  Lanthanum Oxide: 2012-2013; Cerium Oxide: 2012-2013 ; Neodymium Oxide: 2014; Europium Oxide: 2015-2016; Terbium Oxide: 2015-2016; Dysprosium Oxide: 2017; and Yttrium Oxide: 2016.

According to Technology Metals the elements at most risk in terms of supply are: Dysprosium (used in lasers), Yttrium (used in sensors), Terbium (lasers), Europium (experimental applications) and Neodymium (guidance systems).

And the squeeze on rare earths can already be felt now.  Digitimes has highlighted the price of hard drives heading skyward, with the rise attributed to the Chinese government’s export control policies.

Average selling prices in the retail channel are expected to jump in the third quarter.  Due to increased costs for the rare earths 1TB hard drive will go up by five percent, while 500GB drives will increase by 10 percent.

This is expected to mean that, following the effects of the Japan earthquake on the supply chain, hard drive shipments in 2011 may stay flat year on year for the first time.

Although rare earths would generally constitute only a small portion of hard drive cost, the mammoth increase in price by almost 30 times of the material has hit overall prices.

The optical disk industry is also said to be hit by the China’s export quotas, with the key material TFP causing a price hike, with many second tier manufacturers having apparently stepped out of the market.

In China too there are reports from domestic press that prices are leading to higher costs, with batteries and LEDs being badly affected.