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Yesterday China’s largest rare earth producer began a one month suspension of processing operations in order to drive up falling rare earth prices.
In a statement to the Shanghai Stock exchange Inner Mongolia Baotou Steel Rare-Earth said the move was about “balancing supply and demand”.
The company currently accounts for nearly half of the world’s light rare earth production.
Rare earth prices climbed significantly from the beginning of 2009, but have fallen sharply in recent months due to the instability of world markets.
Rare-earth demand is also down after the disruptions of Japan’s tsunami earlier this year.
According to figures quoted from Lynas Corporation by the Wall Street Journal, Chinese prices of neodymium oxide have fallen 35 per cent since June.
Praseodymium oxide has also fallen 17 per cent, and lanthanum oxide has shed 21 per cent.
RBC rare earth analyst Sam Berridge told the Wall Street Journal the processing halt by Inner Mongolia Baotou Steel Rare-Earth would have a significant impact on the market.
“We would expect a month long shutdown from the largest producer in the world to impact prices reasonably quickly,” he said.
“Rare earth production is quite consolidated and the market is quite small, so one of the majors could influence the supply-demand balance quite easily.”
Last month Beijing cracked down on illegal rare earth mining and production and confiscated unapproved stockpiles.
It said the crackdown was made because of environmental concerns.
Rare earths are used in the production of high-tech products such as missile systems and wind turbines, and China currently controls about 95 per cent of the world’s production.