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What Are The Reasons Behind REE Price Drop?
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What Are The Reasons Behind REE Price Drop?

The Rare Earths MMI (Monthly MetalMiner Index) dropped a staggering 11.22% this past month. Industrial production within China proved slow in January. This significantly affected the index, as China remains the source of many rare earth oxides. And with numerous countries searching for non-Chinese rare earth supplies, the Chinese-sourced parts of the index fell greatly.

A move away from China could cause the face of global rare earth supply logistics to change. Currently, rare earth deposits in the U.S., Australia, Sweden, and other parts of the globe continue to catch the eye of mining corporations looking to bump up rare earth production.

Australia Halts China from Raising Stake in Australian Rare Earths

Australian rare earths company Northern Minerals initiated a major move this past month against its largest shareholder, China's Yuxiao Fund. According to a recent article, the Yuxiao fund wanted to increase its share hold from 9.92% to 19.9%, more than twice its current stake. However, Yuxiao couldn't make this move without the approval of the Foreign Investment Review Board (FIRB), which has routinely blocked Chinese investment increases.China's investments in Australian rare earth mining initiatives continue to decline post-pandemic. Many experts believe Australia is key to reducing China's hold on rare earth supplies. Australia contains the world's sixth-largest rare earth reserves. That said, previous efforts by Australia to block Chinese rare earth investors left diplomatic relations between the two nations rocky.

Myanmar, another nation with huge rare earth reserves, also accounts for a large portion of China's rare earth imports. In 2021, this number reached about 60%. China not only remains Myanmar's largest trading partner, but roughly 17% of Myanmar's entire economy relies on mining. Moreover, the salaries Chinese mining companies offer far exceed the average Burmese income, which makes working for such initiatives very tempting. However, this ultimately contributes to China's dominance of the rare earths game.

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Massive Swedish Rare Earth Deposit Site Developing

Last month, MetalMiner covered the news of a large rare earth discovery in Sweden, just beyond the arctic circle line. At the time, researchers estimated the find represented Europe's largest rare earth deposit. This left many wondering how the discovery would impact the global rare earth trade.However, the process of extracting rare earths is a long and tedious one. Therefore, the marketplace cannot expect an immediate turnaround. Swedish mining company LKAB remarked that "the process is slow and expensive… It has been an issue for the industry. So what we are working on now is to try to get the political system to understand that we don't have any problem if they are very demanding on what needs to be done and what needs to be achieved (environmentally and socially)."

While the discovery is undoubtedly exciting, it cannot alleviate the immediate need to break away from Chinese rare earth dependency. That said, the process must start somewhere.     

Tesla Drops a Bombshell

Tesla recently announced that the company would no longer use rare earth supplies when manufacturing new vehicles. The decision was made in part to help alleviate Tesla's dependency on Chinese rare earths. As the name implies, rare earths could potentially becoming scarce and difficult to come by. So, rather than remain reliant on rare minerals, Tesla plans to release vehicles constructed with permanent magnet motors that do not contain rare earth elements.Numerous Chinese rare earth companies witnessed their shares drop after the news. China Northern Rare Earth Group High-Tech Co Ltd., for instance, saw a drop of 8.2%. The company specializes in producing and selling refined rare earths, which it exports from China. Meanwhile, JL Mag Rare-Earth Co. and Jiangsu Huahong Technology Stock Co, two large Chinese rare earth producers, shut down as much as 7% of their Chinese production following the announcement.

If Tesla pulls off its permanent magnet motor in future production, the corporation will no longer require rare earths. But while the motor would likely prove reliable, it would also use much more energy. However, the move would prove worth it for Tesla if it allows the company to break away from rare earths.

Rare Earths MMI: Notable Price Trends

Chinese neodymium fell by 10.85%, bringing prices to 125810.58 per metric ton.
Chinese rare earth carbonate dropped in price by 8.4%, which left prices at $7908.09 per metric ton.
Chinese dysprosium oxide dropped a staggering 15.21%, bringing prices to $306.98 per kilogram
Finally, Chinese yttria dropped in price by 9.53%. Prices at month's start sat at $7810.2 per metric ton.

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