China to Provide Subsidies to Rare Earth Producers in Attempts to Boost Struggling Industry
NEW YORK, 11/27/12 - Rare earth elements are a set of seventeen chemical elements crucial in the manufacturing of popular products such as mobile phones and hybrid cars. According to the U.S. Congressional Research Service the current global demand for rare earths is approximately 136,000 metric tons a year. That number is expected to grow to 185,000 tons by 2015 and top 200,000 tons by 2020. Five Star Equities examines the outlook for companies in the Rare Earth Industry and provides equity research on Lynas Corp. (PINKSHEETS: LYSCF) and Quest Rare Minerals Ltd. (NYSE: QRM) (TSX: QRM).
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Global reserves of rare earths are estimated to be at 110 million metric tons, with approximately 50 percent of reserves in China. It has recently been reported that China will begin providing subsidies to state-owned rare earth producers in an attempt to revive the struggling industry. Falling rare earth prices have recently caused some of China's largest producers to suspend production.
"In the long run, the policy can promote resource protection and effective utilization of rare earths," said Chen Zhanheng, deputy secretary-general of the China Rare Earths Industry Association. "[The subsidy] is aimed at supporting technological upgrades, energy conservation and environmental protection."
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After many delays, Lynas now expects to start production at their Malaysian processing plant in December. "One to two tough years to bring the business to life need to be put in the context of the long-term vision we are realizing. By the second half of calendar 2013, we expect to be moving towards full production capacity and have a business that has the potential to deliver sustainable and predictable earnings," said Lynas' CEO, Nicholas Curtis, at an annual general meeting.
Quest is currently advancing several high-potential rare earth projects in Canada's premier rare earth exploration areas: the Strange Lake and Misery Lake areas of northeastern Québec. The company has reported that a revised resource estimate for the Strange Lake B-Zone REE deposit has shown a doubling of tonnage.
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