(Minews) - Canada.com reports Canada's parliament recently launched a new study of the country's REE industry while a new industry group called Canadian Rare Earth Elements Network, established in cooperation with Natural Resources Canada, is working to have government to set aside funding for research and development in the 2014 federal budget:
"Canada is poised to capitalize on extracting rare earth elements, say briefing notes prepared for Natural Resources Minister Joe Oliver as part of last summer’s cabinet shuffle.
“Rare earth elements (REE) have been categorized by the government as being critical to Canada’s economy,” say the briefing notes, titled “Secret” and obtained by Postmedia News under access to information legislation."
Canadian industry want to secure 20% of global supply by 2018. At the moment China produces some 90% of the world's rare earths – used in a variety of industries including green technology, defence systems and consumer electronics – and imposes export quotas.
Frontrunners among Canadian juniors racing to build the country's first rare earth mine include Rare Element Resources (TSE:RES), Avalon Rare Metals (TSE:AVL) and Quest Rare Minerals (TSX:QRM) while Saskatoon-based Great Western Minerals (CVE:GWG) is recommissioning the Steenkampskraal mine in South Africa with Chinese backing.
China did not always enjoy a virtual monopoly on REE production. The majority of the 17 rare earth elements were sourced from placer deposits in India and Brazil in the late 1940s.
During the 1950s, South Africa mined the majority of the world's REEs from large veins of rare earth-bearing monazite.
From the 1960s to 1980s, rare earths were supplied mainly from the US, mostly from the massive Mountain Pass mine in California, which was eventually mothballed in 2002.
China then took over the industry completely, producing more than 95% of the world's REEs centred in Inner Mongolia and also becoming the top consumer ahead of Japan and South Korea.
Worries about China's monopoly of production sent prices for all rare earths into the stratosphere from 2008 onwards with some REEs going up in price twenty-fold or more.
That reignited interest in the sector with dozens of explorers active around the globe making major discoveries from Canada and Greenland to Madagascar and Malawi.
Molycorp's (NYSE:MCP) Mountain Pass is almost back to full production, Lynas Corp's (ASX:LYC) Mount Weld mine in Australia and plant in Malaysia opened last year.
Prices have now come back down to earth with most REEs dropping in price by 70% or more after peaking in 2011.
For instance, the most abundant and cheapest of these, cerium oxide which is used to polish TV screens and lenses is now trading at $8.50 from all-time highs of $118 in the September 2011. The price for cerium oxide was $4.56 in 2008.
The reversal in europium oxide – the priciest of the widely-used heavy REEs used in medical imaging and the nuclear and defence industries – has also been dramatic.
The price of europium increased more than 10-fold from $403 in 2009 to an average of $4,900 in the third quarter of 2011.
It is now worth $1,110 a kilogram in the export market, while Chinese domestic europium is another $500 cheaper at $630/kg.
