Shares of rare earth element (REE) companies reached new heights when markets re-opened after the holidays on Dec. 29 following news that China has cut export quotas for the strategic metals by 35% year-on-year.
The Ministry of Commerce in Beijing has granted14,508 tonnes of rare-earth export quotas to 32 different Chinese and foreign-owned companies in China for the first half of 2011, down from 22,282 tonnes in the corresponding six-month period of 2010.
“They’ve made public their longer term intentions of not having any surplus material to export by 2014-2015,” Peter Cashin, president and chief executive of Quest Rare Minerals (QRM-V) said in a telephone interview. “By then we’d better have some non-Chinese rare earth production or the West’s high-tech industries are in trouble. Unless there’s development of substitute supply all industries dependent on rare earth consumption will be in great difficulty in the future.”
The news sent shares of Avalon Rare Metals (AVL-T, AVARF-O) surging 44.1% or $2.01 to $6.57 apiece, while Rare Element Resources (RES-V) climbed 42.3% or $4.39 to $14.76 per share. Quest Rare Minerals rose 16.3% or 78¢ to $5.58 per share, Tasman Metals shot up 32.3% or $1.04 to $4.26, and Matamec Explorations (MAT-V) gained 21.2% or 10.5¢ to 60¢ per share.
China has yet to unveil what the export quotas will be for the second-half of 2011.
“The Chinese are keeping us guessing,” writes John Kaiser in his online newsletter The Bottom Fish Action Report. “Needless to say, this has the champions of globalization by American decree hopping mad in Washington, particularly now that China has reframed its rationale for cutting exports from trying to force technology transfer and job transfer to China to trying to cut back on environmental pollution, which has been the key to cheap rare earth prices,”
Kaiser also notes that the security of supply of critical metals will be “a prominent theme during 2011, with rare earths leading the charge.”
Rare earth minerals are used in a variety of high-tech industries and China produces more than 90% of the world’s supply.
Isn’t it funny that you forgot, to talk about Great Western Minerals Group. The oldest Canadian REE company. The only Canadian REE company with cash flow. The only Canadian company that can take advantage of this.>>>>> In another measure to curb rare-earth exports, China said it will raise export duties next year on neodymium.
The government also will start to levy export duties on six morerare-earth metals, rare-earth fluorides and rare-earth chlorides, inaddition to existing tariffs ranging from 15% to 25% on roughly 30 typesof rare earth primary products.
China has also decided to start levying an export tariff of 25% nextyear on alloys with more than 10% rare-earth content, according toinformation on the Ministry of Finance’s website.
The plan to set export quotas for rare-earth alloys has caused concern among some exporters.
Two officials from an exporter based in southern China said they hopethe planned quotas are imposed on only a limited number of products,such as those with more than 30% rare-earth content, adding thatotherwise their business would be siginificantly hurt.
Common rare-earth alloys include rare-earth ferrosilicon with 17%-37%rare earth content which is used as an additive in steel- andiron-smelting, and magnesium rare earth, which contains 2%-10% ofrare-earth elements yttrium and gadolinium and is used in aviation,automotive and defense sectors.