Forget all the frenzy—a supply shortfall is not in the cards

May 01, 2010 | 06:26 AM | Anne Riley

Despite widespread concern that China's declining production and increased demand for rare earths will leave the rest of the world short, a combination of Chinese efficiency improvements and new global production means that little or no supply gap is actually in store for the sector, according to analysts.

"I do not believe there is any great crisis," said Jack Lifton, independent rare earth metals consultant at Jack Lifton LLC and publisher of the Jack Lifton Report.

Although China might be forced to import some outside rare earth minerals in the near to midterm to meet its own soaring demand, internal mining efficiencies slated for completion within the decade should keep China largely out of the global marketplace going forward, he said.

"China's now restructuring its mining industry in general and consolidating and reorganizing to remediate pollution and to increase productivity. When you're doing that, production goes down because you're closing, you're consolidating, you're reconfiguring," Lifton said of short-term disruptions in Chinese rare earths supply. "But what everybody needs to remember is China will recover. They'll fix their environmental problems, they'll improve the efficiency and productivity of their mining sector and sometime within the next decade China will come roaring back as a light rare earths producer certainly able to satisfy its own needs."....