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MUMBAI (Mineweb) -
Though China continues to dominate the world’s rare earth elements market, its share of global production steadily decreased over the recent years. In a new study a German research group notes that in 2013, China accounted for 92.1% of the rare earth oxides produced in the world - down from 97.6% in 2010.
Germany's Federal Institute for Geosciences and Natural Resources (BGR) says in a recent study that 4.2% of rare earth elements were produced in the United States last year, while another 2.3% was produced in Russia, and 1.3% in Malaysia.
The study noted that China accounted for 97.6% of global production of the mineral in 2010. The next year, in 2011, this fell to 95.1% and has come down further in 2013, the report added.
Global economic growth has been weak in recent years, and as a result rare earth oxides production decreased. In 2009, 133,500 tonnes were mined, but production declined to 90,500 tonnes last year.
The German study highlights the fact that 2011 saw a dramatic decline in the minerals’ prices.
China has been trying to arrest the fall in mineral prices and to increase global demand for rare earth elements. Among other things, China has adopted tougher measure to combat smuggling.
BGR expert Harald Elsner noted that according to recent estimates up to 35,000 tonnes a year of rare earth elements was smuggled out of China.
Indeed last month smugglers were caught trying to extract $2.3 million worth of rare earth metals from the country.
Another report by the Xinhua agency has noted that China's rare earth industry suffered a sharp drop in profits in 2013. While industry revenue was close to 77 billion yuan ($12.6 billion) in 2013, up 7.9%, profits tanked 28.1% to 7.7 billion yuan ($1.3 billion), mainly due to falling prices, according to the Ministry of Information and Technology.
Xinhua, the Chinese state media noted that though China is the world's largest rare earth producer and exporter, the industry is beset by problems, such as illegal mining, smuggling and a lack of competitiveness due to weak research and development. Excessive exploration has also caused environmental damage across the nation.
In Early January China said it would promote mergers led by six major producers, including the Inner Mongolia Baotou Iron and Steel Group, China Minmetals Corporation and the Aluminum Corporation of China, among others.
Reportedly the State Council also agreed to form a major rare earth production corporation led by the Ganzhou Rare Earth Group.
The new rare earth group would become the largest of its kind in South China, and the new entity would be based in Ganzhou, where 36% of China's middle and heavy rare earth reserves are located.
After 40 years' of development of rare earth exploration and processing, Ganzhou's rare earth industry accounts for one third of China's total rare earth sales revenue, according to data from the industrial association.
Incidentally, the Inner Mongolia Baotou Steel Rare Earth Group, the largest rare earth metals mining company in China has also bought nine regional mining companies. Under the new agreement, Baotou would receive a 51% stake in each of the companies.
The move by both the group's is part of China’s plan to consolidate its rare earths industry. The large rare earth groups would get preferential polices to better develop the mineral resources, such as production quota, mandatory plan and mining license, the agency added.
China has also been lowering its rare earth quotas in recent months. The nation has lowered rare earths quotas to a total of 15,110 tonnes for 2014. The Chinese Government identified 28 producers which can share the quota.