The global supply deficit of rare earth minerals is likely to peak this year and then swing into a surplus by 2013, according to analysts with Goldman Sachs. The deficit, which has driven up prices more than tenfold since 2009, will be abated by the opening of mines in the West. The 17 elements that make up the suite of rare earths are critical to such products as high-powered magnets, fuel refining, light bulbs, hybrid cars and mobile phone screens. China currently dominates the production of rare earths, and a 40 percent cut in export quotas have sent the prices soaring. Nicholas Curtis, the chief executive of Lynas Corporation, which owns the largest non-Chinese mine, says China is actually on the verge of becoming a net importer of the elements. “China will become a net importer because its consumption for its own domestic value-added industry is going to drive very high (demand) growth for these resources. They’ve explored every inch of China for what’s available and if they had more rare earths deposits of any size it would be being developed now,” he said. According to the Goldman Sachs’ report, there will be a “closely balanced market in 2013, and modest surpluses thereafter—at least, for some of the more abundant light rare earths—with some price softening in the 2013-2015 period.” While analysis from miners conflicts with this report, Goldman’s view matches that of other market participants who believe the current boom is overdone. One major European rare earths trader, who didn’t want to be named, said, “For (the rare earths such as) cerium and lanthanum, there will certainly be some surplus. When you have these high prices, people immediately start to look for substitutes, and it takes one to two years, but people can switch out of rare earths.”
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