On Tuesday, China’s third-largest rare-earth producer said it was raising funds via private placement in part to build a processing plant for rare-earth oxides. The decision by China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. to build the new plant in southern China’s Guandong province is the latest sign that the country’s efforts to consolidate the rare-earth industry and promote value-added processing in the sector are bearing fruit.
Rare earths went from being practically unheard-of a few years ago to being one of the most-talked-about commodities when prices rose multifold between 2010 and 2011 after China set export quotas and moved to have a greater say in pricing, bringing into sharp relief the fact that it controlled 95% of the global trade in the strategically important minerals.
Although China mainly cited environmental concerns in its justification for the export curbs, end users in consuming countries were rattled by the move, sending prices soaring. Praseodynium oxide, for example, which is used to color glass and enamels, rose from less than 100,000 yuan ($16,650) a ton in late 2009 to more than a million yuan/ton by mid-2011. The oxide’s price fell to as low as 345,000 yuan/ton by this summer. Other metals in its class followed a similar track, with prices falling in part as Western producers, notably Australia’s Lynas Corp., took measures to increase extraction and processing, diminishing China’s influence on pricing.
China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. said Tuesday that it would allocate 450 million yuan ($73.5 million) of the up to 1.79 billion yuan it is planning to raise in a private placement to build the Guangdong plant, which will have the capacity to produce 7,000 tons a year of rare-earth oxides.
The move comes as analysts are forecasting prices of rare earths in China to climb further after they rallied this summer, as demand is set to rise from manufacturers of the gadgets and other systems that use them. Apple Inc. suppliers, for instance, are likely to be hungry consumers. The company exceeded analyst forecasts in the first three days of selling its latest iPhones with sales of nine million units.
Source: M.A.D. Investment Solutions
By Yue Li