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China Rare Earth Industry Report, 2006

Published: Jan/2007

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In 2005, China rare earth industry witnessed a healthy and rapid development. China's domestic application of rare earth reached 51,900 tons, accounting for nearly 50% of smelting and separating rare earth products. Meanwhile, the economic returns have also improved greatly. The total consumption of rare earth in China amounted to 8,000 tons in 2005 and the figure will reach 12,300 tons by 2010.

China rare earth market has developed well in 2006. During the first half of 2006, the price of rare earth increased dramatically as well as the total export, particularly for the strategic lanthanon such as terbia, dysprosium oxide, neodymium oxide, neodymium and terbium, etc.

According to the statistics, there are 154 million tons of exploitable rare earth reserves globally, among which 89 million tons (about 58%) are distributed in China. Currently, China has established a complete production system from exploiting, selecting, smelting, separating, and analyzing to testing, with which it can produce over 100 kinds of rare earth products. However, it lags far behind the developed countries in hi-tech rare earth development and application.

The disorderly competition in China rare earth market, especially among rare earth separating enterprises, resulted in a price chaos, and a price war is being fought among domestic enterprises. China tops of the world in rare earth reserves, production scale & output, export and consumption, yet Chinese rare earth enterprises are obsessed with lower price. Therefore, it is imperative for China rare earth industry to carry out an upgrade strategy as soon as possible. And actually, in 2006, the rare earth quota has decreased by 10% over 2005 as a result of related policies formulated by Chinese government, such as the reform of export drawback, and the quota adjustment, etc.

In terms of rare earth products, the primary ones will be gradually replaced by refined chemical ones in the near future and it will show the characteristics of much purer, more compounds and more refined. Besides, foreign capitals will introduce into Chinese markets, which would result in a new round of competition, and inevitably, some small-scale featureless companies will be eliminated from the market eventually.

List of Rare Earth Export Enterprises, 2006

The revival of automotive and electronics industry boosts great demand of the rare earth industry. Automotive catalytic converter and permanent magnet are expected to keep strong demands for cerium and neodymium until 2009. Currently, the production capacity of China rare earth has an excessive growth. In the first half of 2006, newly-increased rare earth separating capacity in Jiangxi and Guangdong reached nearly 10,000 tons, and moreover, the total rare earth separating capacity in South China alone accumulated to 54,700 tons.

At present, the global demand for rare earth, calculated in rare earth oxide, is up to approximately 80,000-90,000 tons annually. Yet, in China, the treatment capacity of rare earth has realized 200,000 tons per year, and smelting & separating capacity has reached more than 200,000 tons annually.

The global application of rare earth is forecasted to be 110,000 tons in 2007. The global demand for rare earth in 2010-2012 will be 600,000 tons (including 350, 000 tons applied in hybrid electric vehicle), half of which will come from China. The global demand for rare earth in 2020-2025 will reach 2 million tons (including over 1.5 million tons applied in hydrogen fuel vehicle, hybrid vehicle and electric vehicle, each accounting for 1/3), some 35% (around 700.000 tons) of which will come from China.

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