China planning to raise export tax on rare earth metal neodymium
China has continued its program of restricting the export of rare earth metals. According to several Chinese news portals, including China Daily and the Hong Kong Commercial Daily, the Ministry of Finance is planning to increase the export tax on neodymium from 15% to 25%, bringing it in line with the 25% export tax rate already imposed on dysprosium, terbium, scandium, yttrium, yttria, europium, dysprosium and terbium.
It was also reported that the Ministry of Finance is planning to shortly report further on its plans for rare earth export quotas.
Neodymium is a popular additive in glass and for high strength neodymium magnets, the strongest permanent magnets known. These magnets are widely used in such products as microphones, professional loudspeakers, in-ear headphones, and computer hard disks, where low mass, small volume, or strong magnetic fields are required. Larger magnets are also used in electric motors for cars and wind turbine generators.
The term "rare earth metals" is commonly used to refer to 17 metals including the 15 lathanides, yttrium and scandium. They are all listed in Group 3 of the periodic table and have similar atomic structures and characteristics.
The metals always occur together in the earth's crust; the fact that they have not separated into individual metals even after eons of repeated melting and resolidifying is testament to the similarity in the properties of these elements.
However each deposit has varying combinations of the metals, though the "Light Rare Earths", those with atomic numbers 57-62, typically account for about 97-99% of the rare earth oxides in a deposit leaving just 1-3% for the "heavies" (HREE). Despite their name the metals are not particularly rare - but they are only rarely found in economically viable concentrations.
Worldwide prices of rare earths plummeted In the 1990s driven down by the triple whammy combination of a rapid rise in Chinese supply, low demand, and intensive competition. By 2000 China accounted for 88% of world production. Today that figure is closer to 97%.
Chinese supply meanwhile is fragile.
The industry has been fragmented and extraction techniques have been inefficient and often environmentally hazardous. China is now therefore taking a raft of measures to protect and optimise its diminishing resources (it recently declared that it has only 15 years resources left of the heavy rare earths), to ensure that it has enough for domestic usage and to maximise the value added in China.
China has therefore been imposing production quotas, restricting export quotas, stockpiling, increasing environmental regulation, closing down small and/or illegal operations and consolidating larger ones in an effort to gain more control.
This sudden shift in policy towards rare earth has set prices for many rare earth metals soaring, and spawn a new generation of exploration and development companies seeking to develop rare earth deposits.
Today's news of an export hike on Neodymium lifted shares in several rare earth focused companies, including Ram Resources (ASX:RMR), Quest Rare Minerals (TSX-V:QRM), Greenland Minerals (ASX:GGG), Rare Element Resources (AMEX:REE), Rare Earth Metals Inc (TSX-V:RA) and Lynas Corp (ASX:LYC), which all rose at least 1%.
Several other players were little changed, including US producer Molycorp (NYSE:MCP) which slipped 0.6% and Avalon Rare Metals (TSX:AVL) which pulled back 0.7%, while Hudson Resources (TSX-V:HUD), Arafura Resources (ASX:ARU), Medallion Resources (TSX-V:MDL) and Great Western Minerals (TSX-V:GWG) all held steady.
Commerce Resources (TSX-V:CCE) and Tasman Metals (TSX-V:TSM) were among the worst performers, both falling more than 5%.
To learn more about some of the companies mentioned in this report, read our indepth aritlce
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