Rare Earths Have Officially Gone Ballistic

The prices of major rare earth metals have just gone through the roof! Below is a chart of Cerium, Lanthanum, and Neodymium, all of which basically doubled in price in just this month alone. Is this due to reduced exports from China, exploding demand worldwide, or a speculative frenzy fueled by the Wenzhou? Perhaps all of the above. Either way, this doesn’t bode well for the price of any good that uses rare earths as an input, i.e. electronics, batteries, hybrids, etc.

On the news front, China just released a report today saying that a massive rare earth deposit was discovered containing 70 tons worth of scandium, an element that is on average four times the price of gold and has traded as high as 10x. More details below:

Extraordinary Rare Earth Deposit Discovered In Zhejiang

The Zhejiang Provincial First Geological Team has discovered a mammoth scandium-polymetallic deposit in northwestern Zhejiang that has proven scandium reserves of 70 tons worth about 70 billion yuan, according to an announcement made by the Zhejiang Provincial Geology and Exploration Bureau on March 29.

The rare earth deposit contains 17 types of metallic elements. Of them, scandium is mainly used in national defense, spaceflight, nuclear power, superconductor and other cutting-edge technological sectors and is one of the elements included in national strategic reserves.

Yang Xiaochun, head engineer of the Zhejiang Provincial First Geological Team, said that the market price for scandium is normally four times higher than that of gold and at one point in history it was 10 times more valuable.

The deposit is also accompanied by a large-scale silver-polymetallic deposit with 800 tons of silver and 130,000 tons of lead and zinc. The silver-polymetallic deposit contains 3,000 tons of cadmium, which is equivalent to the reserves of a large-scale cadmium deposit. There were also medium-scale deposits found containing 7,000 tons of tin, 400 tons of gallium and 5.5 tons of rhenium.

This was the first time to discover not only an enormous scandium deposit in China but also so many types of precious, non-ferrous and rare metals all with reserves above a certain scale in the same deposit.

These rare earth metals are all highly priced. The market price for tin stands at about 200,000 yuan per ton. The market price for gallium is similar to that of sliver, standing at about 6 million yuan per ton. The price for rhenium is 60 million yuan per ton, which is 10 times higher than that of silver.

Although this may alleviate some of the supply concerns for China’s domestic use, it doesn’t mean much for countries outside of China since, of course, finding a huge pile of gold in your own backyard doesn’t necessarily mean you’re going to share it with others.