Fact of the Month

China currently accounts for at least 96% of all rare earth production.

Source: http://www.nytimes.com/2010/12/15/business/global/15rare.html

Feature of the Month: Rare Earth Mining

Unless you’ve been living under a rock (pardon the pun), you have probably heard the recent mania about rare-earth metals. Rare earths are 17 chemically similar elements that are primarily used in high tech applications including everything from iPads and hybrid cars to televisions and nuclear reactors. Looking at their main uses, it is easy to see why experts are expecting the demand for these metals to grow around 10 to 15% per year. China currently supplies over 90% of these useful metals, but recently reduced its export quota for the second-half of 2010 by 72% (from 28,417 metric tons in 2009 to 7,976 tons in 2010) to ensure domestic supply and protect the environment. With the reduced supply and the increased demand, prices of some metals have soared sevenfold in the past six months.

Rare earth mines used to be much more widespread; however, mining companies discovered that it was impossible to compete with China’s inexpensive labor and lax environmental regulations. The game is changing at these sky-high prices and causing miners around the world to reevaluate if operating a rare earth mine outside China can be economically feasible. Molycorp (United States) and Lynas Corporation (Australia) are both optimistic about the future of rare earth mining and together they own some of the biggest rare earth mines outside of China. Unfortunately, neither of these mines are in production and have yet to yield an ounce of rare earth oxides let alone a profit. Lynas is expected to start mining in the third quarter of 2011 and will be the first company outside of China to produce rare earth metals. Molycorp will be second to the market and is expected to start extraction by the end of 2011.

Other companies around the world own deposits, but they have not yet developed plans for extraction. Rare Element Resources (Wyoming, United States) and Quest Rare Minerals (Quebec, Canada) have two promising deposits in North America while other companies' deposits are located in Kazakhstan, Kyrgyzstan and Greenland. Experts warn that not all deposits are created equally and many may never be developed into profitable mines. Although this is a huge risk, many small miners have seen their share price's increase over 100% in the last 6 months.

Many find the information on globalEDGE's Mining, Minerals, and Metals Industry Profile very helpful - you may too!
 

From the globalEDGE Blog

Do you think you have rare earths metals figured out? Many people don't know the differences between light and heavy rare earths nor the process they must go through to become useful. Visit the globalEDGE blog to see some of these misconceptions busted and a few more facts on the rare earth industry!

Featured Resources

The McKinsey Global Institute: Offshoring
This website is managed by McKinsey Global Institute, an independent economic research division of McKinsey & Company. The website provides research publications from MGI regarding offshoring and global sourcing. The website also provides a search engine for locating publications by MGI. Registration is required for some features.
Category: Global

PricewaterhouseCoopers: Industrial Manufacturing
PricewaterhouseCoopers, a professional service firm, provides worldwide background information on industry sectors. This site includes an up-to-date industry environment description, challenges facing the industry and potential solutions, free downloadable publications including annual reviews, and events.
Category: Industrial Manufacturing

Featured Academy

Doing Business in China
The China module should provide one with a general understanding of the following: China’s market potential and hot industries; its culture and people; common situations that arise when conducting business in China; current obstacles and opportunities in logistics; the historical and current problems faced by the economy; and economic and political factors that affect the costs of doing business in China. A case study focusing on China’s rural dilemma is incorporated into this module.
Catoregy: Doing Business In

globalEDGE Business Review

"The Precursors and Outcomes of Trust in the Power Unbalanced China Home Appliance Retailing Industry"
by Yingyun Ma, Brenda Sternquist, & Ying Huang (Volume 4, Number 4, pp. 1-2, 2010)

China’s electronic retailing sector is highly concentrated with only three main retailers. This provides a unique situation for examining the determinant factors and outcomes of trust in power-unbalanced relationships. Retailer buyers from China’s home appliance retailing industry participated in this research (n=327), and answered questions about their relationship with a supplier who was more powerful and one that was less powerful. Communication effectiveness (+), opportunism(-), and conflict (-) are determinant factors leading to trust. Relationship commitment and cooperation are outcomes of mutual trust. Although power symmetry was proposed to have a moderating effect on the negative relationship between conflict and relationship commitment this was not supported.

Newsletter Information

If you have suggestions on how we can improve the newsletter, tell us here!

This newsletter is being sent to you by the globalEDGE Team. You elected to receive this newsletter from globalEDGE when you registered on our website, located at: http://globaledge.msu.edu/. If you wish to unsubscribe from the mailing list, please click on the following link. Please remove me from this list.