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Posts Tagged ‘rare earth minerals’

Brazil’s Vale gears up for rare earths

May 31, 2011 Comments off

“Vale, the world’s biggest iron ore producer, is gearing up to move into rare earth mining as Brazil tries to compete with China to supply some of the world’s most sought-after metallic elements, says Brazil’s science and technology minister, Aloizio Mercadante. The government has met several industrial companies to line up customers for rare earths, a group of 17 elements which are primarily used to make components for such items as wind turbines, electric cars, and computer screens.

‘Vale would bring big benefits to Brazil by entering into this rare earth market and I think it’s an important thing for the west as a whole. It would also benefit Vale as a company,’ Mr Mercadante said. Vale confirmed it was looking at investing in the production of these metallic elements, adding that the project was still at a ‘preliminary stage’. Prices for rare earths, such as cerium oxide, have risen fivefold since January after China, which produces 97 per cent of the elements, started clamping down on exports.”

Source: Financial Times, May 30 2011

Observations:

  • Chinese export restrictions on rare earths have drawn global attention to the risks of having China produce 97% of the total global production of these raw materials to high-tech products.
  • Brazilian company Companhia Brasileira de Metalurgie e Mineracao (CBMM) already produces the rare earth niobium. The government is now aiming to start producing some of the minerals for which China holds a more dominant position, partly to stimulate the domestic high-tech industry.

Implications:

  • Apart from rare earths being a potential source of profits for Vale contributing to the government’s push to make Brazil a producer will help the new CEO develop goodwill with the government. Small concessions like these could help Vale sustain independence in more impactful iron ore related issues later.
  • The enormous increase in rare earth prices after the export restrictions by China are not expected to last for very long. Many other countries and companies are looking into starting up production; a development that is not so much slowed down by the ‘rareness’ of the ores, but more by the time required to set up the recovery process.

©2011 | Wilfred Visser | thebusinessofmining.com

The Rise of China in Mining

October 4, 2010 4 comments

China is rising as a global superpower in the mining industry. Ore from mining companies all around the world is shipped to Chinese ports to fuel the growth of the economy. Building relationships with Chinese government and customers is a top priority for many business leaders. However, few people in the industry know that China itself is a major producer of many minerals. This article explores the Chinese rise of production, the rise of demand, the rise of Chinese mining firms and the rise of investment and sketches the implications for the mining industry of the changing role of the country.

 

1. The Rise of Production

China’s mining industry is the world’s largest in many aspects: the country has 200,000 collectively owned mines1, employing over 10 million miners; it is the world’s major producer of coal, lead, zinc, tin and rare earth minerals and also ranks high in output of iron ore, gold, bauxite and other minerals.

The country has been a major producer for decades, but the enormous demand, the opening of the market to private investors and the introduction of modern mining techniques has boosted the productivity and production of the industry. Significant reserves of most minerals allowed China to grow the market share of mining output for all major minerals in the past 15 years (Figure 1). The growth of the iron metal content output share is even more remarkable when considering that Chinese iron ore typically has a very low metal content: while share of iron content grew from 14% to 15% since 1995, the share of gross weight grew from 24% to 37%2.

Figure 1 - Chinese share of world mining output

The largest part of worldwide reserves of rare earths, titanium, tungsten & molybdenum are in China. These minerals are crucial in the production of many high tech products, giving China a powerful position in international trade. Recently the country has demonstrated this power by implementing export quota for rare earth minerals, favoring the domestic high tech industry.


2. The Rise of Demand

China hardly exports any minerals; all domestic mine production is absorbed by the domestic. Value of total mineral exports in 2009 was a mere $0.2bln, 60% of which was molybdenum3. Until a few years ago the country was a net coal exporter, but the growing demand from the utility and steel industry has turned it into an importer. Though the country does not export ores, it has been building a large iron and steel industry, exporting at a total value of $53bln in 2008. In the same year the production of 500Mt of crude steel accounted for 38% of the world production2. In 2009 the imports exceeded exports, as steel companies responded to the crisis by cutting production. Stepping up production will turn the country into a net exporter of steel again.

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