It appears that the end of the breathtaking price hike for rare earth materials is finally over, with reports that there will be a surplus by 2013 and even China looking to import.
That's according to the Wall Street Journal. As the world’s largest producer of rare earth materials, accounting for 90 percent of the world’s production, China kicked of the meteoric rise in prices following a long period of relative stability through the nineties and throughout the last decade.
The decision for China to cut its exports by 40 percent kickstarted a climb from an average of between $5 and $20 a kilogram before jumping from just $10.32/kg in 2009 to a massive $13 recent average and also involved a stand off with the world’s largest importer, Japan.
All of which meant a swift increase in the share price of mining companies both inside and out of China as country’s have begun to clamour to grab hold of alternative sources.
It seems that the soaring prices that have been seen of late are expected to come down, with Goldman Sachs analsysts predicting a peak this year, with the supply/demand deficit of 18,734 tons this year eventually heading to a surplus in 2013.
However it could be 2015 before prices are lowered closer to the average seen before the China lead price hike.
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So, where shall the extra production of rare earths come from? I have spent some time to investigate the alternative producers of rare earths outside of China and the results are pathetic. The only 2 serious companies are Lynas Corp. and Toyota Tsusho – they have some production facilities and corporate history. Another 2 companies – Great Western Min and Quant Rare Earth have concessions of rare earths with high concentrations but they are all new companies. Everything else is “zero”.
So, where shall the extra production come from? Companies outside of China have just a concession of a hill or a lake with rare earths but not real production.
Read the WSJ's report - Goldman clearly states it believes rare earths prices will keep running upwards for another 18 months UNTIL surplus is reached, whereupon prices will stabilise and may fall for some of the more common lighter rare earths.
Calling the end of the rare earths price rises as at today is a falsehood - rubbish journalism that your publication should be ashamed of.