China Plans Spot Trading Desk for Rare Earth Minerals

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Led by the country’s largest producer of rare earth minerals, China is reported to be preparing the launch of a spot trading platform for rare earth minerals on August 8th. Reuters cites a report in the Shanghai Securities News as its source.

The platform would only allow trading on physical quantities of the minerals, but that would do a great deal to aid price discovery in the market.

China restricted exports of rare earth minerals beginning in 2011, citing damage to the environment and depleting reserves due to over-production. Prices have also suffered, which is likely the chief reason for the creation of a spot trading platform.

The new trading platform will have no significant impact on US producers like Avalon Rare Metals Inc. (NYSEMKT: AVL) and Rare Element Resources Ltd. (NYSEMKT: REE), Molycorp Inc. (NYSE: MCP), which purchased Canada’s Neo Materials Technologies Inc. earlier this year may feel some impact. The acquisition gave Molycorp an operations and sales presence in China, which in addition to being the world’s largest producer of rare earths is also the world’s largest consumer of the minerals.

Paul Ausick