11 JULY 2008
ARAFURA RESOURCES LIMITED (ASX: ARU)
NOLANS PROJECT RARE EARTHS MARKET UPDATE
CHINESE RARE EARTH EXPORTS CUT BY FURTHER 22%
Metal Pages© has reported on the latest Chinese Ministry of Commerce decision to place further limits on rare earth exports.
The effect of the quota reductions on the rare earths market is significant and highlights the need for new rare earths production to come on stream.
Chinese export quotas for the next 6 months will be 11,376 tonnes through 25 companies bringing the total for 2008 to 34,176 tonnes. By comparison, it is expected that total non-Chinese demand for 2008 will be in the order of 60,000 tonnes.
This is a reduction of 22% compared to 2007 figures and is the most significant reduction since the quota system has been introduced:
2004: 48,500t REO
2005: 48,300t REO a 0.5% reduction from 2004
2006: 45,000t REO a 7% reduction from 2005
2007: 43,574t REO a 4% reduction from 2006
2008: 34,156t REO a 22% reduction from 2007
Arafura Resources Limited, through the company’s Nolans rare earths project in the Northern Territory, is well placed, as an emerging rare earths mining and processing company to capitalise on the shortfall of demand which will arise from the restrictions in Chinese export quotas.
Arafura is nearing completion of demonstration plant trials at the Australian Nuclear Science and Technology Organisation (ANSTO) to finalise the processing route for the Nolans mineralisation. The work program is expected to be completed this year and a full definitive feasibility study (DFS) has commenced. The company’s current plans are to commence production at Nolans by 2011 and be capable of supplying at least 10% of world demand for rare earths with a mine life of at least 20 years.
Since 2004, demand for rare earths has grown from 90,000 tonnes to 122,500 tonnes in 2007. Expectations are that demand in 2008 will be 130,000 -135,000 tonnes.
China’s internal share of global consumption has risen from 40% (36,000t REO) in 2004 to 60% (73,500t REO) in 2007. This growth is due to a combination of production quotas, restrictions on foreign investment in the rare earths industry, export taxes and export quotas. In addition, China’s dominance over world supply (currently 92%) means it has significant influence on the future of the industry.
China’s aim has been to encourage value adding processes to take place within China and is reflected in the fact that they now export more rare earths in the form of downstream products such as magnets and phosphors than as raw rare earth oxides.
Arafura Resources Ltd
The potential impact of the reduction in the export quotas may be put in context when it is recognised that the forecast for Japan’s rare earth demand for processing in 2008 alone is greater than 40,000 tonnes, while the rest of the world needs 20,000 - 30,000 tonnes.
Prices for rare earths products have increased significantly over the past three years and further contraction in exports from China should ensure that they will continue to grow.
What are Rare Earths?
Rare earth metals are essential components to products with significant growth potential in the markets associated with the electronics and technology industries, energy efficiency and greenhouse gas reduction.
They are a key component in re-chargeable batteries and the magnets in electric motors, and play a fundamental role in hybrid motor vehicles. These cars are fuel efficient and major contributors to reducing greenhouse gas emissions.
Recently, Japan’s Toyota Motor Corporation with the backing of Australian Prime Minister Kevin Rudd has announced that it will commence assembling 10,000 hybrid motor vehicles at its Victorian Altona plant from 2010.
The diverse nuclear, chemical, metallurgical, catalytic, electrical, magnetic, and optical properties of the Rare Earth Elements (REE) have led to an ever increasing variety of applications and demands. REE are critical and strategic components in many high-technology developments.
REE are also key products in the electronics market, including mobile phones, personal organizers and laptop computers, and in plasma, LCD and CRT display screens.
These new technologies are being rapidly adopted across the globe as electronic media becomes an essential part of personal apparel and business environments.
Arafura Resources
Arafura Resources is a Perth-based specialty metals explorer and developing producer which has operated in the Northern Territory for the past 20 years. It listed on the Australian Securities Exchange in 2003 and has diversified its asset portfolio by targeting projects that will deliver long-term and sustainable value and growth. These include:
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Rare Earths Nolans rare earths-phosphate-uranium resource ARU 100%
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Vanadium Jervois magnetite-vanadium project ARU 100%
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Base Metals A farm-in by Mithril Resources and BHP Billiton at Hammer Hill
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Gold Mt Porter deposit near Pine Creek ARU 100%
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Gold Kurinelli gold project ARU 100%
For more information:
Fact sheets on Arafura can be found on the Arafura Resources website at www.arafuraresources.com.au
Alistair Stephens
Managing Director
+61 8 9221 7666
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