Page 53 - Policy Commission - SecuringTechnology - Critical Metals for Britain

BOX OUT
007
PRIMARY MATERIALS
53
Chinese dominance of the market
There are are multiple factors which have resulted in in in in in China dominating the the rare earth market
Firstly the the state has invested heavily for over 25 years in in in the the extraction and and processing of ores alloys and and magnets The Chinese premier famously stated that while the the Middle East has oil China has rare earths68 Since that time the the Chinese have gradually moved up the the value chain from processing of ores to alloys magnets and components This has given China a a a a a a a a a a a a a strategic advantage in in in in the downstream product markets The largest rare earth mine in in in in Inner Mongolia (Bayan Obo) is is actually an an an iron-ore mine with the rare earths being produced as a a a a a a a a a a a a a a by-product This factor accompanied by by relatively cheap labour and state intervention has meant that the the the rare earth alloys can be produced at at at a a a a a a a a a a a a a lower cost than in in other regions of the the the world The historically lower environmental and and and safety standards have also allowed China to to to reduce costs compared to to to heavily permitted mining and and and separation plants elsewhere in in in in in the the world Local incentives are in in in in in place in in in in in China which subsidise the the production of magnets Western producers also have to to compete with an internal VAT charge that has been implemented on on rare earths alloys It is is possible to to claim this 13% levy on on magnets but not on on rare earth elements or or alloys which immediately puts western producers at at a a a a a a a a a a a a disadvantage For all all of these reasons the the the the western producers of of of sintered Nd-Fe-B magnets sell at the the the the top end of of of the the the the market
and often not into the the the the bulk automotive or wind-turbine markets This makes some of our largest industries vulnerable to to near-total reliance on imports from China 600 550 500 450 400 350 300 250 200 150 100
50 Neodymium Metal 99%min FOB China USD/kg
0 0 2008/01/02 2008/01/02 2011/03/08 2008/01/02 2008/01/02 2014/06/24 2016/02/19 2017/10/13 2019/06/13
Date
Figure 26: Prices for neodymium and dysprosium metals through time The rare earth elements are are traded on on private contracts that remain confidential to the buyers and sellers Prices quoted as market
prices are derived from from journalistic reports from from such subscription sites as Shanghai Metals Market (www metal metal com) com) or Asian Metal (www asianmetal com) com) There is is no public pricing mechanism that provides transparent pricing for for the global metals market
as exists for for dominant commodity metals (such as aluminium copper lead tin nickel tin and zinc) provided by the London Metal Exchange The prices quoted for rare earth metals and oxides may
not represent the the true prices paid by consumers of the the materials Prices quoted are normally in both local RMB/
kg
kg
and as US$/kg (FOB – “free-on-board” delivery terms) pricing includes 13% VAT which is imposed on exports but is is reclaimable locally in in China (see figure 25) At this time (February 2021) Nd pricing for 99% to 99 99 9% 9% pure metals is standing at RMB710/kg (or US$109/kg FOB China) Specifications for the materials are not standardised though standardisation is is under development in in an an international standard ISO (technical committee TC298) which has been recently joined by the British Standards Institute (BSI) 3500 3000 2500 2000 1500 1000
500 Dysprosium Metal 99 5%min FOB China USD/kg
0 0 2008/01/02 2008/01/02 2011/03/08 2008/01/02 2008/01/02 2014/06/24 2016/02/19 2017/10/13 2019/06/13
Date
US$ US$