“Eventually, the Chinese producers will be unable to supply the world with cheap rare earths. Demand is rising rapidly, especially in military technologies, clean energy and smartphones/tablets” and supply risks remain,” said Jeb Handwerger, president of Mining Development Corp., in an interview with Myra Saefong of MarketWatch.
The U.S., the European Union and Japan have complained that China was deliberately cutting back exports to inflate prices and the quota was designed to develop an unfair advantage for domestic producers with cheaper access to raw materials, BBC reports.
In 2010, China, the world’s largest producer of rare earths minerals, accounted for as much as 97% of the world’s rare earth supply. The metals are used in many advanced technologies, such as smartphones and wind turbines, among others. Over the same year, China cut back exports as part of a political dispute with Japan, pushing up prices on rare earths by 40% from the preceding year and raising concern over supply.
Other countries began developing their own supplies and many countries, including Brazil, India, the U.S. and South Africa, have all been major producers in the past. As prices increased, companies reopened facilities. Consequently, China’s market share has declined to about 86% and the country’s exports now frequently fall short of maximum levels under the quota system. [Rare Earths Supply Issues]
Market Vectors Rare Earth/Strategic Metals ETF
