KUALA LUMPUR – June 2, 2020: Like many industries, the rare-earth sector has been bogged down by the economic downturn resulting from the current Covid-19 pandemic.
But one industry analyst is optimistic recovery will be relatively speedy. Such an upturn once the pandemic is effectively contained is likely, predicted China-based commodity analyst firm, Baiinfo.
In an email to The Mole, the company said this is due to the importance of rare-earth as an essential input in high-end technology, smart appliances, robotics and clean energy.
It sees China as benefitting the most from any recovery due to its stranglehold on the global rare-earth output, which is about 80 per cent.
“As a large exporter China is bound to be affected. However, as a niche product, and coupled with its industry characteristics, the market will not be too pessimistic. With the clearance of Covid-19, demand will climb up.
“More than 80 per cent of the rare-earth enterprises in China are state-owned, which has the stronger ability to counter risks than private enterprises. What’s more, domestic supply and demand are the major factors to pricing. The market will not be overly gloomy,” said Baiinfo.
The International Energy Agency is on the same page with Baiinfo, stating that rising deployment of clean energy technologies is set to supercharge demand.
For some minerals, energy transitions are already the major driving force for demand growth. Since 2015, electric transport and grid storage have quickly become the largest consumers of lithium, together accounting for 35 per cent of total demand today, according to IEA.
Fearing China’s monopoly over rare-earth export, lawmakers in the United States last month pushed for a law aimed at ending its dangerous dependence on Chinese rare-earth and other critical material supplies.
Because of this they aim to establishing a supply chain in the country. The concern is primarily due to the country’s heavy usage of rare-earth to manufacture high-tech military assets.
Thus the US Department of Defence decided in April to help fund a processing plant in Texas, a project by Lynas Corporation, the largest rare-earth producer outside China.
However, on May 22, Lynas, which has a refinery near Kuantan, stated that the funding had been put on hold due to political opposition in the US to foreign involvement in critical supply chains.