The deficit of global rare earth minerals is likely to widen to 13 per cent by 2014 due to severe production cuts and supply restrictions by China, the world’s largest supplier, contributing nearly 97 per cent of the world production. Rare earth minerals are used extensively for manufacturing plasma televisions, smartphones and energy saving light bulbs.
According to a recent report by Globe Research, the overall annual supply of rare earth minerals is likely to remain tight at 156,200 tonnes, as compared to demand of 177,200 tonnes in 2014. In 2010, total supply was 125,000 tonnes, a deficit of 15,000 tonnes from the global demand. Beginning 2015, however, over 200 mines are set to commence operation, which may smoothen supplies.
The deficit has opened a plethora of opportunities for companies like Indian Rare Earths Ltd, the public sector mineral company focusing on domestic mining of rare earth, and Varun Industries, the sole company with a huge mineral asset in Madagascar.
“International mining companies involved in rare earths globally are making significant investments in long-term operations to meet the increasing demand. The demand for rare earth oxides in various niche applications also augurs well for mining companies involved in this domain. Australia, South Africa, Alaska, Canada and Sweden are reported to have the leading mines globally in terms of quality, besides China,” said Kiran Mehta, chairman and managing director, Varun Industries Ltd (VIL).
VIL, one of India’s largest stainless steel kitchenwares manufacturers and exporters, has diversified into mines and minerals in Madagascar and awarded 1,111 mining blocks of uranium (thorium and gold as byproducts) covering a reserve of 1.7 million tonnes of uranium, 4.35 million tonnes of thorium and 53,000 kg of gold. In 10 out of 1,111 blocks it has discovered total resources of 266.8 million tonnes. It has signed an MoU to sell the entire rare earth concentrate output to Atomic Energy of India.
India has a negligible share in the rare earth minerals business but with rapidly growing consumption of user products, the industry is hit hard due to high prices. Chinese miners have also restricted exports, resulting in more than 1,000 per cent price rise in one year.
The average price of europium oxide, for example, has risen 155 per cent to $1,850 a kg in the second quarter of this year from $725 a kg in the first quarter. Similarly, the lanthanum oxide price has almost doubled to average at $140 a kg from $75 a kg in the period under consideration. Another rare earth element, dysprosium oxide, used in magnets, lasers and nuclear reactors, has also risen from $700-740 a kg, to trade currently at $1,470 a kg.
“These are exciting times for us, as our successful diversification into high-potential mineral-rich geographies like Madagascar would pay us high dividends in the near future. Varun’s deposits are available in heavy mineral sand blocks, which can be extracted in about 10 months,” Mehta added. Current world reserves of rare earths, as assessed by the US Geological Survey, are estimated to be about 110 million tonnes. Based on their continued availability and typical metallurgical recoveries, this should theoretically be sufficient for the next 200 years.