Source:Mining Weekly                       Date: 14 September, 2011

Experts are debating whether the rise in rare earth mineral prices represents a bubble or a correction of the market. The prices of rare earths have climbed since China, the world's only supplier of many rare earth minerals began limiting its exports. Since China began limiting its production, investors and firms in Mongolia started considering production in Mongolia.

The 15 rare earth elements are necessary for the production of a number of high-tech hardware such as hybrid cars and wind turbines. The price of rare earths from China has risen since the beginning of this year. Both Cerium oxide and Lanthanum oxide have soared 5 times their prices from the beginning of the year. Magnet materials, such as neodymium oxide, have risen from RMB 264,000 per ton to RMB 1.5 million per ton. The heavy rare earth dysporosium oxide has jumped from 1.43 million per ton to 13.78 million per ton since June.

While some call the of rise of rare earth prices a bubble, Jack Lifton, a Technology Metals Research specialist calls it a market correction.

It is looking more and more, as China enters a period of switching from an export-led economy to one of domestic consumption, [as if] the country has been subsidizing the rare earths mining and refining industry for a very long time. It looks like prices are normalizing, or as the stock market theorists like to say, correcting.

However, Lifton did add that speculation is currently driving up rare earth prices. However, he also believes that two of the world's most commonly produce rare earths, lanthanum and cerium, are already in surplus.

Lifton believes the Chinese domestic market for rare earths will continue to grow, but with only small production growth. Meanwhile, others suggest China will likely begin to import the less abundant heavy rare earths within the next four years.