Global consumers and manufacturers dependent on rare earth metals for their products better brace themselves for a further supply crunch as China, the world's foremost supplier of the precious minerals, will cut down overall production output to just about 70 per cent by 2015.

In its latest report, "Rare Earths & Yttrium: Market outlook to 2015, 14th edition 2011," international metals and minerals research firm Roskill said much of the total output would go to Chinese manufacturers to address the demands of domestic industy, leaving only a small amount for export.

With rare earths getting more precious, U.S. Rep. Michael Coffman, R-Colo., said governments around the world should consider building up strategic reserves for security purposes since China has been an "unreliable trading partner." An inventory will likewise curb the world's overdependence on China production.

The legislator believed a stockpile would enable rare earth players and producers to operate at full capacity and avoid fears of falling demand, as well as boost prices.

Although new projects around the globe, such as that by Molycorp of the United States and Australia's Lynas Corp., are forecast to contribute an additional 56,000 to 57,000 tonnes of rare earth oxide to global supply by 2015, the world remains doubtful if the two companies can indeed provide a stable supply, and relatively faster turnaround.

Consumers have also been forced to re-evaluate their usage of rare earths after China's production controls pushed prices to record highs. The country's measures were inarguably effective as these resulted to a decline in official production of over 4 per cent annually from 2006 to 2011.

China is expected to announce soon its 2012 production and export quota. Analysts believe the numbers could drop further. From January to September this year, exports from China stood at only 11,000 tonnes, accounting for only 40 per cent of the overall export quota for 2011. Latest figures likewise showed a 65 per cent fall year-on-year.

In the years to 2015, Roskill said the main demand driver for rare earths will be for use in NdFeB magnets, forecast to grow by 11 per cent to 13 per cent per annum as potential markets expand to include its applications in permanent magnet motors for electric vehicles and wind turbines. Magnets could account for nearly one third of demand by 2015.

Strong demand growth also is seen for rare earths in NiMH batteries, phosphors, optical glass and ceramics, Roskill added.

Rare earth prices have declined by about 27 per cent from their highest values this year.

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