RARE EARTH MATERIAL(INTRODUTION)

China controls 97% of the world’s production of rare earth elements (REE), and is now slapping quotas on the amount of its REE available for

export, with astonishing price effects. Each tonne of Chinese REE exports was valued at $109,036 (on a

free on board basis) in February 2011, the first time they have risen above the $100,000/tonne

threshold. Cerium, lanthanum and neodymium have all practically doubled in price in March 2011

alone .

Contin…• The Middle East has its oil, China has rare earths” • the country is a powerhouse in the production

and supply of REE. • China has produced 97% of global supply and yet

it have 36% of total reserves.• Uptil 1980s production was dominated by US and

other including India,South Africa and Brazil.• China produces REE much more cheaply than

anybody else.

Contin….• China have monopoly in supply of REE material• One of the biggest consumers of China‟s REE is

Japan. The elements are transformed there from basic commodities into expensive, desirable high-tech goods

• Not only does China dominate the market, it has been restricting the supply of its REE to the market since 2004 – by an average annual rate of 13% over the past six years.

Contin…• China recently announced that in H1 2011 it will

cut export quotas by a massive 35% on 2010 totals

• Other large importers of REE metals (and compounds) than Japan are the US, Germany, France and Austria And at a lower level but probably likely to grow in demand are markets for REE in Estonia, Korea, The Netherlands, and Brazil

• Most consumers, particularly Japan, the US and Korea, have interpreted China‟s export policy as being the first salvo in a deliberate trade war

• limiting supplies in order to ensure its own comparative advantage, protecting its domestic industries and attempting to keep as much of the profits from its natural resources for itself

• by limiting supplies of REE available for export, the Chinese are forcing other countries to find and develop alternative sources of REE. With significant financial costs and a time lag in restoring supply/demand parity, China is awarding itself a technological leap of quite remarkable proportions

• It still has the greatest quantity, at 36.5% of global reserves Russia has the next highest reserves at 19% of world totals, followed by the US with 13.2%, Australia with 5.5% and India with 3.1%. The rest of the world has 22% of REE reserves.

• By withholding supplies of a critical raw material, China is – they argue – preventing its economic rivals from going about their normal business on fair trade terms and at reasonable prices

• at the end of March( Previous year) China‟s ministry of finance and taxation announced that it was levying a new tax of between 30-60 yuan ($4.54-$9.10) per metric tonne on rare earths (depending on the type mined) from 1 April

• The higher tax (60 yuan per tonne) will be on the light rare earth elements while the lower tax (30 yuan per tonne) will be levied on the medium and heavy rare earths

• US and EU has shown their problem regarding China’s policy on trade.

• US wants to end the monopoly of china in REE but it is not visible in present time

Conclusion…• China wants to Dominate and Manipulate the REE

market.

• Their strategy is aiming at abducting and acquiring the REE present in Other countries

• They are forcing Other nations to produce their own REE