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China Opens Rare Earth Trading Platform

News of China opening its first rare earths spot trading platform has reached us via IndustrialMinerals (IndMin), the London-based publishing and research house focusing on non-metallic minerals pricing and business information, and intellectual home for Simon Moores, the latest addition to the American Resources expert panel.

Here’s how IndMin’s Laura Syrett breaks down the news about the new “Baotou Rare Earth Product Exchange Co. Ltd” in her article:

• Led by Baotou Steel Rare Earth Hi-Tech, the trading platform, the stated goal of which is to trade REEs “in a way that will regulate prices and ensure greater market transparency,” will involve some of the key players in China’s Rare Earths production, among them Xiamen Tungsten, Sichuan Jiantong Rare Earth Co. Ltd and Inner Mongolia Hi-Tech Holding Co. Ltd.

• Syrett quotes American Resources principal Daniel McGroarty, who argues the mechanism will have little effect on market transparency, and feels that China’s recent announcement to effectively take 20 percent of its Rare Earth capacity off the market will be far more significant for the industry.

• Carole Ferguson with UK investment bank Fairfax IS Plc disagrees in an interview with the BBC, and, while not expecting “minute-by-minute pricing”, presumes that the platform will be a “transparent, formal marketplace.”

However, whether or not the platform will provide a window into the wheelings and dealings of China’s Industry, analysts agree that ultimately, China’s move is once again is about control – which is all the more reason for the U.S. to step up efforts to reduce our (unnecessary) foreign mineral dependencies.