I posted this on LYC. It applies to CYU as well.China currently...

I posted this on LYC. It applies to CYU as well.

China currently is responsible for 97% of the world's REE production, but accounts for only 30% of the world's known REE reserves.

China is currently tightening up on supplying the world - it needs these REEs itself for its own needs and to develop high tech industries in China using REEs.

I find nothing surprising in China's logic, which seems to have been misunderstood by many in the West.

No, China is not trying to squeeze the West. Yes, China is trying to create an environment which encourages Western hi tech firms to invest in China.

China is simply behaving like western nations who have an industrial advantage. The west is stupid if it thinks that China should (or will) be satisfied with only manufacturing low end goods.

This augers well for Lynas, and also for Australian REE miners with Chinese connections; e.g. Arafura, China Yunan Copper, etc.


From Agora financial -

China?s Commerce Minister Chen Deming says if the West is having a hard time securing supplies of rare earths, it?s their own damn fault.

Well, he didn?t put it in so many words. But he had a provocative thing or two to say yesterday as he accompanied President Hu Jintao on his visit to Washington.

He said it?s a burden on China to be responsible for 97% of world production. He said Western powers should play a ?blame game? if they want a reliable supply of these essential materials, used in everything from your computer?s hard drive to your car?s catalytic converter.

And then Chen pointed out something that easily gets overlooked: China has only about 30% of the world?s rare earth reserves.

?As the Chinese look out to the future,? Byron explains, ?they see that they?re digging out their rare earth resources at a fast pace. How many years left of reserves? It?s a math game -- depending on the exact metal, the ores, the grades, the future prices. Still, pick a number -- 20 years? Thirty? Fifty?

?To the Chinese, there?s an endpoint, and it?s out there.

?So the Chinese understand that it behooves them, as well as the rest of the world, for other rare earth players to come into the game. Looking ahead, the Chinese will control 97% of world RE output -- until they don?t, and then we may see a Cantarell-like drop-off in Chinese RE output. (Cantarell is Mexico?s giant oil field, where output has simply fallen off a cliff in recent years.)

?Right now, the rare earth investment players in Western markets are focusing on the nearest-term candidates for non-Chinese production -- which includes Molycorp, subject of a market melt-up in recent months, and now a precipitous drop.?