By Eric Onstad
London (Reuters) -US -based designs to destroy China’s dominance in the rare earthly market and lead to investments in its own industry have moved on equipment with Washington -backed plan to create a separate, higher pricing system.
The West is struggling to weaken China’s grip for 90% of the supply of rare lands, partly because the low prices set in China have eliminated incentives for investment elsewhere.
Miners in the West have long summoned a separate pricing system to help them compete in providing the group of rare earths of 17 metals needed to create super strong magnets of strategic importance. They are used in military applications such as drones and fighters, as well as in EV and wind turbines.
According to a transaction published last week, the US Department of Defense will guarantee a minimum price for its only internal materials for the RARE Earth MP miner, almost twice as big as the current market level.
Las Vegas -based MP already produces the extraction and cultivation of rare lands and said he expects to start the production of commercial magnets in his facility in Texas at the end of this year.
Analysts say that the pricing transaction, which comes into force immediately, must have global consequences – positive for manufacturers, but can increase consumers costs as automakers and, in turn, their customers.
“This indicator is already a new center of gravity in the industry that will withdraw prices,” says Ryan Castile, managing director of Adamas Intelligence consulting company.
DOD will pay the MP difference between $ 110 per kilogram for the two most popular rare lands and the market price, currently set by China, but if the price rises over $ 110, DOD will receive 30% of the additional profits.
Castilloux said other indirect beneficiaries of the pricing system may include companies such as Belgian Chemicals Group Solvay, which began expansion in April.
“This will give Solvi other impetus to command a similar level of prices. It will give them a floor to stand on, you can say,” Castillu added.
While Solvay refused to comment, other rare miners, developers and their shareholders welcomed the news.
Aclara Resources is developing rare earth mines in Chile and Brazil, as well as plans a parting plant in the United States. Alvaro Castelon, the strategy and development manager of the company, told Reuters that the deal added “new strategic paths” to the company.
The gradual increase in MP production
MP materials that have suffered a net loss of $ 65.4 million last year to a large extent due to the low pricing of China will accumulate the production of magnets at their factory in Texas to initially up to 1000 metric tonnes a year, will later expand to 3000 tonnes a year.