Overseas rare earth projects continue to suffer losses or face closure

The overseas rare earth projects continued to lose money in 2014. The first three quarters of the report showed that the US Molybdenum Company reported a loss of US$275 million. The Mountain Pass Mine remains unproduced and the Australian rare earth company Lynas was officially put into production in the second quarter of 2014. Loss continues. Industry insiders believe that if China's rare earth export restrictions are reduced, overseas rare earths will be more difficult to achieve profitability, and face the risk of shutting down after continuing losses. China Merchants Securities analysts said that in theory, China's exports of rare earth prices should be higher than the domestic price of tax-free 32% to 42%, including 17% of value-added tax and 15% to 25% of export tariffs.

At present, the average selling price of Lynas this year is only higher than the domestic tax-free price of about 25%, which has a certain price advantage relative to China's exports of rare earths. Due to the failure of the WTO rare earth litigation, China's rare earth exports will face liberalization in 2015. If the export tariffs are reduced or cancelled, the overseas rare earth enterprises’ price advantage will be further weakened, and the losses will continue to face losses after three consecutive years of substantial losses. With the risk of stopping, China’s position on light rare earth will remain. The Chinese government has taken various measures to comprehensively renovate the rare earth industry, including the formation of a rare earth conglomerate and a special campaign to crack down on rare earths. The first quarter of 2015 will be a crucial period for the development of the Chinese rare earth industry.