Rare-earth pinch hits oil refining

The skyrocketing cost of rare-earth metals from China is pushing up the cost of gasoline production in the U.S., the latest sign of the impact of Beijing’s decision to restrict exports of the minerals. Prices for some of the chemicals refiners use to process gasoline have risen dramatically after China, which controls about 95% of the world’s rare-earth supply, said it would reduce export quotas for the metal by 35% for the first half of 2011.  Beijing had already reduced quotas by 72% for the second half of 2010. The price increases could raise gasoline-production costs by US$0.27 per liter, and potentially lead some refiners to cut back on fuel production to protect their profits. Prices for lanthanum and cerium, rare earths used in oil-refining equipment known as fluid catalytic cracking units, or FCCUs, more than tripled in price between the second and third quarters of 2010, according to Australian rare-earth supplier Lynas Corp. Although rare earths account for only up to 4% of catalysts used in these units, the price increase has added as much as an extra 25% to catalyst costs, according to the National Petrochemical and Refiners Association (NPRA). (January 11, 2011)