I would like to know what is a reasonable price for rare earth minerals (e.g. cerium fluorocarbon, monazite, ionic, yttrium phosphate, brown yttrium niobium, etc.) in the international market, putting aside all political biases?
There seems to be a disagreement between the world's largest rare earths exporter (China) and other rare earths demand countries on this issue, (in fact I don't want to use the politically charged terms "China" and "West" to divide the two academic communities) In the "Chinese" academic community, scholars often criticize that the international trade market for rare earths is now a "buyer's monopoly" market, the export price of rare earths is so low that it cannot compensate for the environmental pollution and losses caused by mining. This is tantamount to China providing implicit subsidies to sellers at the cost of environmental pollution. (Luo et al., 2022)
However, the more dominant view among academics in REE-demanding countries is that the international REE market is a "seller's monopoly" and that China's REE trade policy is aimed at maximizing profits. (Muller et al., 2015) What's more important is that rare earth prices are significantly and negatively correlated with the extent of new energy promotion (Massari & Ruberti, 2012)
Let us discuss this question without bias, whether there is a reasonable price in the international trade market for rare earths such that.
1, for rare earth exporting countries, a price that compensates the user value and environmental value of non-renewable minerals while meeting the development costs and normal profits
2, for the importing countries, this price will not hinder the development and promotion of industries that depend on rare earth minerals (such as new energy, etc.).
And, most importantly, what is the literature that discusses the relationship between the two and calculates the possible appropriate price for rare earths?
I think we have to explore this issue, after all, for all countries, maximizing welfare is the ultimate goal of trade, not political interests.
The determination of a reasonable price for rare earth minerals is a complex issue that involves multiple factors and considerations, including production costs, environmental impact, demand and supply dynamics, market competition, and government policies.
There is no agreed-upon method for determining the price of rare earth minerals that takes into account both the user value and environmental value. However, there have been some studies and proposals for establishing a more sustainable pricing mechanism that takes into account both economic and environmental considerations.
For example, the concept of "green pricing" has been proposed, where the price of a product takes into account the environmental and social costs associated with its production and use. Similarly, the "circular economy pricing" considers the full life-cycle cost of a product, including the recovery and reuse of resources at the end of its life.
There is limited literature that directly addresses the issue of determining a reasonable price for rare earth minerals. However, some researchers have explored the economic and environmental implications of rare earth mining and the trade of rare earth minerals. These studies can provide valuable insights into the various factors that affect the price of rare earths and the trade dynamics of this industry.
In conclusion, while there is no straightforward answer to the question of what constitutes a reasonable price for rare earth minerals, it is important to consider both economic and environmental factors in determining the price. More research is needed to develop a more sustainable pricing mechanism that takes into account the full life-cycle cost of rare earth minerals and promotes a circular economy.
Dear Dr. Ahmad Al Khraisat :
Thank you very much for your detailed and high quality answers, which allowed me to learn more about the progress of research in this area.
Grateful
Zishan
I don't wish to be political, but the Chinese government is not above manipulating the supply and demand for materials, however it has exposed itself to the free markets where supply and demand determine the ultimate pricing for materials. Rare earths are ultimately no different despite the near monopoly that China has.
Points to consider with pricing of rare earth supplies:
- Profitability of production determines supply quantities
- Most first world countries will have environmental legislation and policing to ensure environmental concerns are addressed, this will be part of the production costs
- If supply costs are prohibitive then substitution, or cheaper sources will be pursued
- If there is strategic importance, then more costly supply options which provide certainty of supply will be pursued, governments do this frequently, but large corporations also do this.
- Steel or aluminium are good studies in how the economics change with technology advances.
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