Updates to this story
The decision by China to limit the production of rare earth materials will lead to a dramatic rise in prices of technology devices over the next few years, a report released today warned.
China’s recent decision was presented as a move to streamline production with a view to reducing pollution, and nothing to do with the fact that the country has a near monopoly on rare earths.
According to Robert Castellano, president of The Information Network, prices will increase until “non-Chinese rare earth mines are up and running, increasing product availability and thereby decreasing prices.”
"During the past 20 years there has been an explosion in demand for many items that require rare earth metals,” said Castellano. “China capitalized on its rich rare earth deposits and cheap labour to drive down prices to a point that nearly every mine outside China was forced to shut down because they couldn't compete on price."
It is noted that in the past year prices have already risen considerably. Prices for Ceria, a rare metal used in the manufacturing of semiconductors as well as LCD panels and high brightness LEDs, have risen by 1,000 percent already in the past year. Ceria is also used in polishing glass disks for hard drives.
Another rare earth element used as a phosphor in cold cathode fluorescent lamps in laptop back lights and plasma display TVs, Europium, saw its price jump by 170 percent last year, while Neodymium, used in magnets for hard disk drives and hybrid electric vehicles, has seen its value rocket by 420 percent, writes Cnet.
However, according to Castellano, prices will eventually level out as capacity increases for rare earth production in other countries.
"We estimate that the Chinese held 90 percent of capacity of rare earth oxides with 103,300 tonnes, but its share will drop to 67.2 percent in 2014 based on output of new mines coming on stream. China's capacity will only increase 10.4 percent to 114,000 tonnes between 2010 and 2014, whereas non-Chinese capacity will increase nearly five-fold, from 11,500 to 55,800 tonnes," wrote Castellano.
So it was with truly impeccable timing yesterday that South Korea announced plans to begin producing its own rare earth resources after stumbling across huge reserves, prompting something of a gold rush.
According to an official at Korea Resources Corporation, the find was made during the redevelopment of a closed ore mine in Yangyang, Gangwon Province. "We decided to begin full commercial mining in 2012," he said.
Due to a hike in the price of iron ore in recent months, the Korea Resources Corporation decided to redevelop the mine and found deposits of Lanthanum and Cerium, writes Chosunilbo.
Dr. Sung Yoo-hyun of the corporation's research institute said that the resources found were of low quality, though it is considered likely that they will find higher quality metals once exploration begins.