China’s clampdown on exports of rare earths essential for the electronics and new-energy industries may create a windfall for a handful of Western companies seeking to benefit from surging global demand.If I were the Chinese I'd be tempted to keep prices up until MCP came online and then, well, crush 'em.
Molycorp Inc., owner of the world’s largest non-Chinese deposit of rare-earth metals, and Lynas Corp. both plan to open mines in the next two years to meet the demand, forecast by the Chinese Rare Earths Industry Association to gain by almost two- thirds by 2015.
Their shares have more than doubled this half, tracking gains in prices for rare earths that are used in the manufacture of disk drives, wind turbines and smart bombs.
“There’re only two genuine new companies coming on-stream that can offer a meaningful level of production and that’s Molycorp in the States and Lynas in Australia,” Hunter Hillcoat, an analyst at Investec Bank Australia Ltd., said by phone from Sydney. The risk is “you have to assume they can bring on production seamlessly and that the price is still at the same level by the time they’re in production,” he said.
China, producer of more than 90 percent of the world’s rare earths, reduced its second-half export quota for the minerals by 72 percent in July and is now further restricting exports in the $1.2 billion market, according to industry participants. Prices for some of the minerals jumped as much as sevenfold in the past six months, prompting companies including Glencore International AG, the biggest commodities trader, to seek to restart and open mines.
Molycorp plans to restart a mothballed California mine in the second half of 2011 and produce about 20,000 metric tons of rare earth oxides by the end of 2012. The Mountain Pass mine met almost all the world’s rare-earth metals demand before closing eight years ago. The company may double its planned capacity to 40,000 metric tons, it said Oct. 19. The Greenwood Village, Colorado-based company has surged 144 percent since raising $394 million in a July initial public offering.
Sydney-based Lynas plans to start production from its A$550 million ($541 million) Mt. Weld project in the third quarter next year with initial output of 11,000 metric tons a year, which will double to 22,000 tons by the end of 2012, it said Sept. 28. Its share have soared 210 percent this year.
“Lynas is in a good position because it signed a number of” sales agreements, Andrew Sullivan, an analyst at BBY Ltd., said from Sydney. “It definitely has first-mover advantage for Western or non-Chinese rare earths users that are looking to diversify. The same could be said about Molycorp. It’s got agreements in place for quite a bit of its production.”...MORE
I'm just sayin'.
We have so many posts on rare earths and the companies that I've stopped putting the links in subsequent posts. Instead you can, if interested, use the search this blog box, keywords rare earth.