China's Export Control Law, which was first drafted in 2017 and went into effect in December of last year. Amidst global concerns about the law's extraterritorial application, particularly during the final drafting stage last year, various parties involved were nervous about whether or not rare earths would be subject to the law. At the end of last week, a month after it came into effect, China suddenly announced a draft ordinance for the control of rare earths. The situation is such that it is difficult to keep an eye on future developments.
On the other hand, there have been several notable developments on the African continent this week in the expansion of mining areas and refining, which has been underway in various countries for some time in an attempt to break away from dependence on China for rare earths.
In addition to regulating illegal mining and separation in mines, the proposed rare earth control ordinance also refers to metal factories and recycling plants. In the past, some companies have been refining illegally mined rare earths at magnet recycling plants. The rare earth control proposal has Articles 1 through 29, with only one mention of exports in Article 15. It says that rare earth importers and exporters must comply with the principles of the Rare Earth Trade Control Law.
When I asked an experienced source who deals with rare earths about this, he said
It's still a draft, so nothing has happened yet. The media makes a lot of political noise when it comes to rare earths, but it's not a big issue. The market hasn't reacted in any particular way," he said, keeping his cool. However, the timing of the announcement (before the inauguration of U.S. President Joe Biden) suggests some sort of check-and-balance intention.
China Rare Earth Trends Latest
According to data recently released by China, China's rare earth exports in 2020 totaled 35,448 tons, down 23% from the previous year (the previous year's total was down 12.6% from the previous year), the second consecutive year of decline and the lowest level since 2015. In terms of this year's decline, the mainstream view is that sluggish overseas demand for corona catalyst applications was the main factor.
On the other hand, China's rare earth exports, which account for about 90% of global production, are rapidly recovering on the back of a surge in global demand for electric vehicles and wind power equipment, and experts believe it will be a top performer from 2021 onwards.
The fact that Southern Rare Earth, China's main rare earth producer, has recently implemented price hikes for the heavy rare earths terbium, dysprosium, gadolinium, and holmium is an example of support for this view, and there are also reports that China's domestic rare earth permanent magnet material plants are expanding production beyond the second half of 2020.
Confident in the recovery and future growth of global demand for Chinese rare earths, China has taken concrete actions to strengthen rare earth management, including political intentions against the backdrop of ongoing trade frictions with other countries. The draft ordinance has a much broader scope, from focusing on mine development and smelting separation to covering the entire supply chain from mine development to product distribution, which shows how serious China is.
The market for neodymium metal, for which demand is expected to grow rapidly in the near future for use in magnets, has been rising sharply since December, reaching its highest level in the past five years, and there is a good chance that it will continue to rise in the short term.
Neodymium Metal Export Quotations (99% USD/kg FOB China) 5 Year
Terbium Oxide Export Quotations (99.99% USD/kg FOBChina) 5 Year
In addition, several companies are attracting attention as alternative suppliers of rare earths, including
※Australia Lynas Stock Price Trend
The recent rise in the share price and trading volume of Lynas is such that it appears to be approaching the rise seen during the last rare earth shock.
※American Rare Earths Stock Price Trend
The volume since listing (2011) is most active now.
A variety of activities are taking place in Africa
In Africa, where the mining and exploitation of rare earth reserves is underway, test mining and testing are being carried out at laboratories set up by companies from other countries in Africa.
Australia's Ionic Rare Earths raises Uganda Makuutu mining target by 50% to focus on Africa
Ionic Rare Earths has announced a 50% increase in its mining target for the Makuutu rare earth mining project in Uganda, to 450 to 900 parts per million (ppm).
The company, which was established in 1998, owns 100% of the rights to the San Isidro gold project in Nicaragua and 51% of the rights to the Uganda project, where test mining began in February last year.
Reference: Ionic Rare Earths stock price and net income
Since the launch of the Makuutu project, Ionic Rare Earths' share price has been rising with volume, but its earnings have not been stable as it continues to post losses. Expectations are high for this project.
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Rainbow Rare Earths Completes Drilling at Phalaborwa Project (South Africa)
Rainbow Rare Earths has announced that it has completed the auger drilling program at its Faraborwa rare earths project at its South African laboratory. The pilot plant has been successfully operated and is said to be capable of producing over 3 tonnes, with results expected in the first quarter of 2021.
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Montero Mining and Exploration begins preparations for legal proceedings against Tanzanian government
Canada's Montero Mining and Exploration had begun rare earth mining in Tanzania in 2011 under the Wigu Hill Mine Project.
However, the Tanzanian government amended the Mining Act in 2017 and announced a ban on the export of gold-copper concentrates in March of the same year, followed by the enactment of Mining Regulations in 2018. In response, Montero notified the Tanzanian government this year of its intention to file a complaint in the International Court of Justice, claiming that this was a violation of the bilateral investment agreement signed between Canada and Tanzania in 2013.
Prior to Montero, Winshear Gold and Indiana Resources had filed similar complaints against the Tanzanian government's action, and Montero's action was taken while awaiting the Tanzanian government's response to these complaints.
Tanzania has a unique political system in Africa, with a one-party dictatorship and a rotating presidency every few years, and in recent years the current president has been pushing for the re-nationalization of companies that were privatized in the past.
If the 2018 law changes are actually enforced, most foreign companies will not be able to actively promote resource investment in Tanzania for some time to come.
This is an example of the difficulty of conducting business activities in Africa, a region that has been under French and British rule for a long time and where each country has different characteristics, without taking into account the complex background.
（IRUNIVERSE USAMI）
