China Enters the Market

China began producing notable amounts of rare earth oxides in the early 1980s and became the world’s leading producer in the early 1990s. Through the 1990s and early 2000s, China steadily strengthened its hold on the world’s rare earth oxide market. They were selling rare earths at such low prices that the Mountain Pass Mine and many others throughout the world were unable to compete and stopped operation.

Defense and Consumer Electronics Demand

At the same time, world demand was skyrocketing as Strong Neodymium Magnets were designed into a wide variety of defense, aviation, industrial, and consumer electronics products. China capitalized on its dominant position and began restricting exports and allowing rare earth oxide prices to rise to historic levels.

China as the Largest Rare Earth Consumer

In addition to being the world’s largest producer of rare earth materials, China is also the dominant consumer. They use rare earths mainly in manufacturing electronics products for domestic and export markets. Japan and the United States are the second and third largest consumers of rare earth materials. It is possible that China’s reluctance to sell rare earths is a defense of their value-added manufacturing sector.

China’s Apex of Production Dominance?

The Chinese dominance may have peaked in 2010 when they controlled about 95% of the world’s rare earth production, and prices for many rare earth oxides had risen over 500% in just a few years. That was an awakening for rare earth consumers and miners throughout the world. Mining companies in the United States, Australia, Canada, and other countries began to reevaluate old rare earth prospects and explore for new ones.

High prices also caused manufacturers to do three things: 1) seek ways to reduce the amount of rare earth elements needed to produce each of their products; 2) seek alternative materials to use in place of rare earth elements; and, 3) develop alternative products that do not require rare earth elements.

This effort has resulted in a decline in the amounts of rare earth materials used in some types of magnets and a shift from rare earth lighting products to light-emitting diode technology. In the United States, the average consumption of rare earths per unit of manufactured product has decreased, but the demand for more products manufactured with rare earth elements has increased. The result has been higher consumption.

China Buying Resources Outside of China

Chinese Neodymium Magnet Manufacturers have been purchasing rare earth resources in other countries. In 2009 China Non-Ferrous Metal Mining Company bought a majority stake in Lynas Corporation, an Australian company that has one of the highest outputs of rare earth elements outside of China. They also purchased the Baluba Mine in Zambia.