China Sets Up Rare Earth Industry Association
By Adam Currie — Exclusive to Rare Earth Investing News
China recently announced that it has set up a rare earth association to s p e ed up the unification of the diverse industry, which has drawn criticism from what many overseas trade partners are calling unfair export quotas.
According to the state-run Xinhua news agency, the association will consist of 155 members across the country, and will report to the Ministry of Industry and Information Technology, which is currently responsible for regulating rare earth production.“Shake up the industry” Su Bo, an industry vice minister, announced that the move was made because Beijing wants to “shake up the industry” by phasing out smaller-scale smelters, giving large players a greater stake in the supply of rare earth metals and in turn boosting environmental protection. "China will continue to clean up the rare earth industry, expand rare earth environmental controls, strengthen environmental checks, and implement stricter rare earth environmental policies," said Bo. Less than a month ago, the already tense US-China relationship took a new turn as the US, EU, and Japan moved in on the World Trade Organization (WTO) to challenge China's restrictive rare earth export policies. Some speculators argue that China's goal is to create the ultimate monopoly by driving up export costs to the point that technology manufacturers are forced to relocate their facilities to the People's Republic. It was also announced that Gan Yong, the President of the Chinese Society of Rare Earths, will be president of the new association. He claimed that the body will help to “form a reasonable price mechanism” at a time when China is being accused of deliberately forcing up prices by minimizing exports. Molycorp updates resource estimate Meanwhile, Molycorp Inc. (NYSE: MCP), one of the only non-Chinese producers of rare earth, has raised its estimates of reserves contained at its California mine. According to a company press release, a new independent study has confirmed that its Mountain Pass mine contains 36 percent more probable or proven reserves than originally estimated. It now estimates reserves at 2.94 billion pounds of contained rare earth oxide equivalent, compared with a previous estimate of 2.24 billion pounds. The updated analysis is influential in that it means that Molycorp's total proven and probable reserves now add up to approximately eleven times the current global demand of 120,000 tonnes a year, most of which is supplied by Chinese producers. The company has stated that it expects output at the mine to reach its phase one annual rate target of 19,050 tonnes by the end of the third quarter of 2012. From a market competitiveness perspective, the updated estimate comes at an ideal time for Molycorp as the miner's closest competitor outside of China, Australia's Lynas Corporation Ltd. (ASX: LYC), is facing numerous permitting delays at its processing facility in Malaysia.
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