Parliamentary report says half of globe's known rare earth reserves are in Canada and China's deposits could be worked out within three decades.

Canadian industry want to secure 20% of global supply by 2018. At the moment China produces some 90% of the world's rare earths – used in a variety of industries including green technology, defence systems and consumer electronics – and also consumes the bulk of global production.

In January a new industry group called Canadian Rare Earth Elements Network, was established in cooperation with Natural Resources Canada to develop and research the sector. Canada's parliament launched a study of the country's REE industry in November which was released last week.

According to the report global production of REE currently totals roughly 130,000 tonnes per year.

That equates to industry revenues at the primary level of a modest $4 billion annually. Though REE production is small in comparison to other metals and minerals, the committee noted that REEs support a manufacturing sector worth between $2 trillion and $4.8 trillion.

Director general of the industry and analyst for the Department of Natural Resources, Christiane Villemure, says in the report:

"Over the last 10 to 15 years, the world consumption of REEs has increased at 8% to 12% per annum, a trend that experts agree will continue, and may increase."

Industrial demand for certain REEs are projected to shoot up by as much as 2,600% by 2025 according to studies from the Massachusetts Institute of Technology. That compares to a 30-year historical production growth trend of roughly 5% annually.

Five elements are highlighted in the report — neodymium (Nd), Europium (Eu), Terbium (Tb), Dysprosium (Dy) and Yttrium (Y) — due to "scarcity, high demand, and criticality in much high-tech application."

The report quotes Luisa Moreno, senior research analyst at Euro Pacific Canada, that while China supplies nearly all of the world’s heavy REE demand, its resources are diminishing significantly, with "less than 30 years’ worth of estimated supply remaining."

Canada accounts for approximately 40% to 50% of the world’s known REE reserves.

Moreno noted that $3 billion has already been invested in REE projects outside of China between 2008 and 2010. Of the 56 projects identified, half are qualified as "advanced exploration" assets.

Government officials identified 11 Canadian REE projects in the advanced exploration stage, all of which are Canadian owned. The parliamentary committee estimated that total capital expenditures required for these mines vary significantly – from $106 million to $2.5 billion.

The report notes five projects targeting production within the next five years, including Avalon Rare Metals' (TSE:AVL) Nechalacho project in the Northwest Territories; Quest Rare Minerals' (TSE:QRM) Strange Lake project and Matamec's Zeus-Kipawa joint venture in Quebec; Pele Mountain Resources' (CVE:GEM) Eco Ridge project in Ontario; and Orbite Aluminae's (TSE:ORT) Grande-Vallée property in Quebec.

According to government officials, Canada's $1 million REE research and development investment over the past three years is "relatively small" compared to other advanced nations.

The US has invested around $120 million in research over the past five years, while Australia has spent around $80 million over the last three years.