china flooding rare earth market, page-2

Leeman,

I don't see it that way.

The Chinese have said it all along that they have a real concern of the environmental impacts of extracting rare earth on their country, and that other nations should start making an effort to produce their own REE. This is why they were willing to go to the WTO court to fight with the US, Japan and EU for the right to reduce and determine their own export quota, to help conserve these precious REE for their own use.

The Chinese government are not as oblivious or as callous to the pollution on their country side and cities, as many of us may view them to be. They are starting to show a genuine concern in cleaning up heavy polluting industries. Some cities now even running a lottery on who can buy a car to help reduce smog.

I think if anything, the Chinese government would feel some pressure taken off them now that Lynas is on board and has commenced as a REE producer. Yes, the demands are not as high as before, but like Lynas, the Chinese will not be selling them for cheap, given the efforts that they go through in extracting the REEs.

Although Chinese export is slowing, China is gradually moving towards a reliance on domestic driven demands. In the long term, they will need a huge reserve of REEs to meet those demands. Flooding the market with REEs would work against their own interests.