China's REE Clampdown Benefits Canadian Miners

Montreal Gazette, Robert Gibbens

China's clampdown on exports of rare earth metals used widely in smartphones and other electronic products is opening up huge opportunities for the Canadian and international mining industry, consultants Ernst & Young said.

Global rare earth metals demand is expected to surge by more than 60% in the next five years, said Zahid Fazal, the leader of the consultant's mining practice in Quebec.

"This represents a unique opportunity for mining companies to rebuild the supply chain outside China and keep a lid on soaring prices," he said. "We already see companies crowding the market with new projects aimed at filling the supply gap. But because the projects are risky and financing is costly, "we could see a fierce fight for cash in a limited investor pool."

He said it's getting to be a race to the finish to develop the next producing asset.

"Companies entering production first are more likely to capture current price premiums. . .later the market will probably be very sensitive to increases in supply."

Rare earth metals exploration is active in several parts of Northern Quebec, including the Strange Lake property in Nunavik. Development is costly and time-consuming because the rare earths are usually found with other metals and separation is difficult, analysts said.