Consumers of rare earth elements (REEs) have grown increasingly concerned about sources of supply as China, which currently produces most of the world's supply, continues to constrict exports in order to redirect them toward internal consumption.
Things are about to change. The United States is on track to be the largest non-Chinese producer of rare earths within two years. In fact, by 2012 US output may account for as much as 12% of global supply of REEs. By 2015 both Australia and Canada, which currently produce no REEs, may also be contributing significant sources of supply.
US-based Molycorp Inc. is on the verge of mounting full-scale mining operations at its Mountain Pass project in California. Within a year, the project, actually a revamped existing mine that had been dormant for several years, is forecast to be producing nearly 20,000 tonnes/year of rare earth oxides - more than twice the level of all current non-Chinese production combined (which currently accounts for only about 3-4% of global supply).
In Australia, Lynas Corp.'s Mt. Weld project is also expected to start in 2011 and build up to planned output of approximately about 11,000 tonnes/year by 2012.
This means Mountain Pass and Mt. Weld over the next two years could approach 25% of China's current output of rare earths or an estimated 21% of expanded Chinese output.
Canada could enter the ranks of rare earth producers by 2015, the year Avalon Rare Metals has indicated it may be able to bring its Nechalcho project (formerly known as Thor Lake) into production.
But Western producers will have a long way to go to match Chinese output. China's estimated 2009 production of REEs is estimated at 120,000 tonnes, of which about half is a co-product iron mining at a single operation in Inner Mongolia. Chinese output by 2012 is expected to increase by more than 20% to about 145,000 tonnes of rare earths.
By 2014, Chinese output is forecast to grow by another 14% or so to 165,000 tonnes, while the rest of the world will produce upwards of 38,000 tonnes by then, roughly a four-fold increase from 2009 levels.
Brett Hartke is a contributor to ResourceInvestor.com who has more than 20 years experience researching and writing about commodities and the metals markets.