Chinese earth producers’ merger worries analysts
A study by analysts has indicated that merger of Chinese rare earth producers could affect global prices at a time when demand for the Rare Earth Elements (REE) is rising due to their use in electric vehicles and other ‘green energy’ technology.
Companies which have merged are China Minmetals Rare Earth, Chinalco Rare Earth and Metals and China Southern Rare Earth Group, according to an article on Mining.Com.
“The merged companies will increase the control over prices in the international market place and could lead to even higher prices in the coming year,” independent economist Patricia Mohr said.
According to Mr Mohr, REEs were already the “biggest winners” in terms of price appreciation in 2021, particularly the light REEs neodymium and praseodymium, and the heavy REE dysprosium — all of which are used in Electronic Vihecles.
He noted that the price of neodymium oxide (99 percent China FOB), for instance, hit US$142,300 per tonne on December 8, a 79 percent year-on-year increase, and the highest level since May 2012.
And CRU Group consultant, Daan de Jonge, said the merged company would be the world’s second-largest REE producer in terms of output after China Northern Rare Earth Group.
Mr Jonge said this would account for about 70 percent of China’s heavy rare earths production, based on Chinese issued quotas for the first half of 2021.
“This will mean that the pricing power of key rare earths, such as dysprosium and terbium, will be in the hands of one ‘super group,’” he said.
China is the world’s biggest producer of rare earths, a group of 17 minerals employed in a range of applications including permanent magnets used in electric vehicles, renewable energy devices and military equipment.
The Asian juggernaut controls about 85 percent to 90 percent of the world’s rare earths processing.
Last week terbium oxidereached US$1,730 per kilogram, up 68 percent from a year ago, while dysprosium oxide has reached US$456 per kilogram, up 57 percent year-on-year.