Rare Element Resources
Bear Lodge Project
Canadian NI 43-101 Technical Report
October 9
th
, 2014
10135-200-46 - Rev. 0
19-3
19.2.1 China
China’s rare earth industry is undergoing a number of significant changes and will
likely continue its transformation over the next several years. To increase its control
over the industry and pricing, in January 2014, the Chinese government announced a
plan to consolidate the industry into six designated state-owned companies. The six
companies, with substantially larger financial and mineral resources than many
smaller Chinese rare earths producers, are expected to contribute to reducing illegal
mining and environmental degradation. The larger enterprises will also be better able
to absorb the continually escalating costs of labor, safety and environmental
protection that are expected to have an impact on the Chinese rare earth industry.
These larger enterprises should have the resources to mitigate the impact of falling
ore grades that may affect many Chinese rare earth mining operations.
Chinese rare earth production growth should be rather modest for the next several
years, as the six major Chinese rare earths companies focus resources on regional
industry consolidation and deal with rapidly escalating costs for labor, safety and
environmental protection. These companies’ relatively poor recent financial results
might also constrain capital available for expansion of their operations. Other
potentially limiting factors include declining ore grades, other government attempts to
control illegal mining, and the reported overcapacity in certain segments of China’s
rare earth supply chain.
19.2.2 Rest of World
Non-Chinese mine production of rare earths has revived over the past two years with
the start-up of Lynas Corporation’s Mt. Weld Mine in Australia and the LAMP
processing plant in Malaysia, and the restart of Molycorp’s mining and processing
operation at Mountain Pass, California. Both projects have encountered significant
ramp-up problems that are constraining production to well below designed capacity,
but both are expecting to reach their nominal first phase production capacity (of
approximately 19,050 tonnes of rare earth oxides (REOs) for Molycorp and 11,000
tonnes of REOs for Lynas) within the next year. Both projects are producers of
predominantly light rare earths and are expected to be able to produce a majority of
the non-Chinese world’s demand for cerium, lanthanum and the magnet materials
neodymium and praseodymium when they reach full production. However, with
magnet materials expected to be the fastest growing segment of the rare earths
market for the next several years and with China expected to become a net importer
of certain rare earths in the second half of the decade, most industry sources believe
that there is room for additional non-Chinese projects in the space, particularly those
