The latest survey indicated declines in prices for most rare earth products last week.

Prices were RMB 34,000/mt for lanthanum oxide, RMB 36,500/mt for cerium oxide, RMB 367,500/mt for praseodymium oxide, RMB 325,000/mt for neodymium oxide, RMB 287,500/mt for didymium oxide, RMB 4,850/kg for europium oxide, RMB 1,775/kg for dysprosium oxide, RMB 131,000/mt for gadolinium oxide, RMB 65,500/mt for cerium misch metal, RMB 387,500/mt for praseodymium-neodymium alloy and RMB 1,825,000 mt for dysprosium-iron alloy.

Demand for rare earth products remained depressed, with some cargo holders cutting prices for sales. Many producers have yet to resume production as orders remained poor in early April. Operating rates at rare earth smelters also remained low, and some of them only produced semi-finished products to push down costs.

We expects rare earth prices to fall further this week given strong bearishness among market players.
 

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The GuruFocus 52-week low screener reveals that the rare earth and metals company Molycorp Inc. is at a 52-week low of $5.30 (high was $35.79). According to the GuruFocus Value Screen for 52-week lows, Molycorp is 85.2% off its high. But top investor Gurus, John Griffin and Steven Cohen appear to be holding on, and Molycorp's insider traders were busy in February.

Guru John Griffin is the largest Guru Molycorp stakeholder, with 2,864,700 shares as of the fourth quarter, when he made the new buy. With Griffin's trading history, his MCP shows an average share price of $9.58, and a 47% loss. GuruFocus research shows that Molycorp is down 85% over 12 months, off 49% since January. With a market cap of $1 billion, and a P/B ratio of 0.5, the company reported consolidated net revenues of $528.9 million during 2012, a 33% increase over the full year 2011. The company generated a gross profit of $17.3 million in 2012, as compared to $218.9 million during the prior year. According to the company, gross profit decreased as a result of significantly lower pricing and increased production costs, offset in part by increased volumes and the acquisition of Molycorp Canada in June 2012. The company also acquired a leading rare earth processor, Neo Material Technologies, for $1.3 billion (Canadian) in 2012.

Commenting on Molycorp's 2012 performance, President and CEO Constantine Karayannopoulos said, "The economics of our model of vertical integration on a global basis remain strong... Our fundamental strategy going forward is to return confidence to rare earth customers through supply security and price visibility."

Owner of the largest U.S. deposit of rare earth, Molycorp Inc. mines and processes rare industrial metals and minerals needed in a wide spectrum of manufacturing applications. The open-pit Molycorp mine in Mountain Pass, Calif., was once the world's largest producer of rare earth elements ( REE ). The mine was closed due to numerous leaks of radioactive wastewater as well as competition from China, the world's giant REE producer. The global company, headquartered in Colorado, re-opened the new and improved Mountain Pass mine in 2012, calling it "Project Phoenix."

Molycorp products and materials are critical to the manufacturing of electric vehicles, smartphones, solar power systems, advanced water treatment systems and a great deal more. The defense and aerospace industries use Molycorp materials in satellites, guidance and control systems, and global positioning systems.

Guru John Griffin is the largest Guru stakeholder, with 2,864,700 Molycorp shares as of the quarter ended Dec. 31, 2012, when he made the new buy. With Griffin's trading history, his Molycorp holdings show an average share price of $9.58, and a 47% loss.


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Tantalus Rare Earths has revealed a new resource estimate for the total rare earth project in Madagascar which has confirmed its massive scale.

The review, carried out by consultant SRK, has defined a 435mln tonne resource at 0.08% total rare earth oxides (TREO), which equates to 348,000 tonnes of contained TREO.

This triples the size of the resource, which was last assessed in 2011.

“Our optimistic view of the value of the Tantalus project continues to be supported by the results of the exploration programme,” said chief executive Jurgen Schillinger.

“The issue of this updated JORC compliant inferred mineral resource represents a further milestone for the total rare earth project.

“It confirms the massive scale and grade of the project. It justifies proceeding with the proposed technical evaluation and preparation of a preliminary economic assessment.”

Tantalus rare earths also confirmed that analysed material shows that 19% of the REOs are in the ‘heavy’ category – across the industry these ‘heavy’ rare earths are typically considered to be premium products.

And Tantalus rare earths says that once cerium is excluded in production the heavy rare earth ratio will increase to about 31%.

It was also highlighted in that the research being conducted by the University of Toronto has confirmed that the  project’s rare earth material can be processed using very basic and environmentally friendly leaching method, which will separate a rare earth concentrate from ionic clays.

This material, according to Asian Metal, which is conducting separate research, is similar to the ion absorption clays found in China, which yield production costs averaging just US$3 to US$4 per tonne.

Tantalus rare earths said that the REO basket price for the material is estimated, by Asian Metal, at US$71.26 per kilogram.

Meanwhile, after applying a 35% discount to that basket price, Tantalus rare earths says the in-the-ground rare earth resource (excluding cerium, which cannot be processed simply) would be worth an estimated US$9.9bn.

“The suggested presence of a relatively large ion adsorption type clay deposit at the total rare earth concession renders it of particular importance to global efforts towards the expansion of HREO supply.

“The ion adsorption clay deposits of Southern China are currently the primary source for the vast majority of global heavy rare earth production, and have endowed China with a distinct economic advantage, as they are generally comparatively simpler and less expensive to exploit than their bedrock counterparts.

“Assuming additional studies reinforce test work indicating the presence of ion adsorption type clays, the development of the total rare earth Project will constitute an important step towards the establishment of an ex-China HREO supply chain that is directly comparable, and potentially competitive on a price basis, with that of China.”

The new resource estimate is based on a large amount of data taken from 289 drill holes, 968 pits and more than 20,000 samples.

Last week, Tantalus rare earths received regulatory approval for a share issue to raise up to €10.5mln.


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Greenland Minerals and Energy, a junior company focused on delivering a production center for specialty metals, including rare earth elements (REEs), at its Ilimaussaq complex in South Greenland, has decreased the estimated capital cost for its Kvanefjeld project from $1.53 billion to $810 million as it considers a staged development option.

Kvanefjeld, situated within the Ilimaussaq complex, was one of the company’s first large-scale deposits to be delineated, and is recognized as one of the world’s largest resources of REEs. It is estimated to contain a favorable mix of REEs, including yttrium.

Greenland Minerals and Energy is now focusing on a staged development strategy for the project, with initial mine throughput set at 3 million metric tons (MT) per annum, eventually expanding to 6 million MT per annum. The project development will consist of two stages, namely a concentrator stage and a refining stage. The concentrator stage will cost an estimated $450 million while the refinery stage will cost a further $360 million.

Greenland Minerals and Energy also confirmed that with the mine and concentrator study component of the feasibility study now completed, it will be able to finalize environmental and social impact assessment studies and apply to the Greenland government for an exploitation license. Construction is set to begin in 2015, with first production scheduled for 2017.
 

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Washington right now is supposed to be all about slashing budgets and tightening belts — but the Department of Defense has recently asked Congress for over a billion dollars. To buy rocks.

Specifically, to buy rare earths and other minerals that are crucial to the U.S. defense industry, and whose supply is currently at the mercy of China and its opaque political system. Japan, for example, was starved of rare earth elements during a maritime dispute with China in 2010. The United States wants to hedge that risk, given the damaging consequences an abrupt clampdown could entail.

The DoD has in previous years noted China’s near-monopoly on global rare earth metal production, but the present report, delivered to the House Armed Services Committee in late March, describes the risks in stark terms, and sketches out a range of scenarios.
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One scenario has China embargoing exports of some key rare earth elements, and notes that currently the U.S. would be hamstrung.

Stockpiling some of the crucial elements is one of the proposed remedies for China’s control. It’s an idea that has hardly been heard since the later years of the Cold War, given the growth of globalized and largely unfettered trade that has characterized the last several decades.

Daniel McGroarty, principal of American Resources, a policy group, and president of U.S. Rare Earths, a mining company, referred to a reflection made by Adam Smith, the ideological father of free markets, over two hundred years ago: that when it comes to strategic items like sailcloth and gunpowder, “it might not always be prudent to depend upon our neighbors for the supply.”

Rare earth metals are to the the modern world what gunpowder and sailcloth were to 18th century Britain, McGroarty says, which explains the DoD’s concern.

                  

“I think we lost sight of the geopolitical or strategic element that might cause countries to intervene in industry for reasons of advantage that are not just economic,” McGroarty said in a telephone interview. “I think we just didn’t see that. And now when we do see it, the situation has changed drastically.”

Two decades ago, McGroarty said, the rare earth market was split between the United States and China. “Now it’s become extraordinarily lopsided,” with China producing over 90 percent of supplies of rare earths.

The Department presents its report on Strategic and Critical Materials Report on Stockpile Requirements every other year. In the past it has noted China’s predominance in the rare earth metal space, but had not previously evinced the concerns seen now.

In a strategic risk assessment given in Appendix 12, the possibility of China cutting off rare earth exports was assigned a mean probability of only 4 percent, though with dire consequences. “Gross domestic product losses would be high, and the consequences would extend over a significant timeframe,” the report said.

It continued: “Economic consequences of war with China are high based on the mutual dependence between the two countries. Militarily the conflict would be violent, but quick; and we would get the better of it, at least in the next ten years. Politically, there would be some loss of credibility on both sides, due to the failure to prevent the war. Trade disruptions would also have major Chinese domestic political consequences.”

A scenario where China cuts off exports of some key minerals for a year “in an effort to coerce or punish the United states… as well as to drive up commodity prices,” was also considered. There would be a $1.2 billion shortfall for the 72 minerals considered.

Complicating the assessment is the sometimes haphazard and fragmented nature of how rare earths are obtained from China: in the south of the country, tens of thousands of metric tonnes of rare earths are thought to be wrung from the ground, and refined and exported, by a chaotic chain of fly-by-night mining operators — none of those figures go into the official books. Estimates for that illicit activity range from 10,000 to 40,000 metric tonnes per year.

At the height of its production, Molycorp, a U.S.-based miner of rare earth elements that was hit hard by China’s rock-bottom prices, says it planned to produce 20,000 metric tonnes of product in 2012. This means the underground Chinese supply component could be as much as double the entire U.S. supply, which goes some way to illustrating the opaque and potentially volatile nature of Chinese supply.

“Think about how nervous that would make a Pentagon planner,” McGroarty says.
 

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The monthly Rare Earths MMI® slipped by one point, registering a value of 42 in April – a decrease of 2.3 percent from 43 in March.

Metalminer's rare earth  metal prices index continues as the worst performing MMI of all 10 MMI indexes.

“Like we have seen in previous months, we note that the entire Rare Earth index has not slid; rather, the slide comes down to a few key rare earth metals,” said Lisa Reisman, managing editor of MetalMiner.

“In particular, we see price weakness for yttria, samarium oxide, neodymium oxide, lanthanum oxide and europium oxide,” she continued.

The fact that that the price drops continue to impact only a handful of rare earth metals suggests to apply caution to any press or pundit statements slamming the entire sector. Price has been seen weakness in specific metals based upon the supply and demand fundamentals for that particular metal, but other rare earth metal prices remain well-supported, indicating a market in greater balance.

So despite the index registering a value of 42, Metalminer won't draw general conclusions that all rare earth metal prices have declined.
 

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Europium oxide finished as the week’s biggest mover – and, in fact, the only mover after dropping 4.5 percent.

Cerium oxide remained unchanged for the week. The price of dysprosium oxide did not change since the previous week.

Lanthanum oxide, neodymium, neodymium oxide and samarium oxide, among others, also remained essentially flat.

Following a 25.5 percent decline in price, yttria finished the month down hard. A 13.3 percent drop over the past month hit neodymium oxide. Lanthanum oxide prices dropped by 12.8 percent this month. Samarium oxide was down 9.5 percent for the month. After falling 6.8 percent, europium oxide finished the month down as well. Cerium oxide prices fell 6.0 percent. Praseodymium oxide prices decreased by 2.0 percent, and the value of praseodymium neodymium oxide weakened by 1.6 percent. In a whole, rare earth oxides prices fell down in the past week.
 

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Jiangxi Ganzhou Rare Earth Group was established on March 30. Zhang Anwen, Deputy Secretary General of the Chinese Society of Rare Earths (CSRE), said the establishment of Jiangxi Ganzhou Rare Earth Group marks the formation of “4+1” framework on China’s rare earth industry restructuring.

The “4+1” framework involves Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech (hereinafter referred to as Baotou Steel Rare-Earth), Aluminum Corporation of China (Chalco), China Minmetals Corporation, Rising Nonferrous Metals Share and Ganzhou Rare Earth Group.

Jiangxi Ganzhou Rare Earth Group is the parent company of Ganzhou Rare Earth Mineral Industry and is now the only owner of rare earth mining rights in Ganzhou. Namely, it owns all of the 44 rare earth mining rights in Jiangxi. The group will merge rare earth smelting & separating enterprises and application enterprises in Ganzhou, enabling it to have access to 70-80% of rare earth mining and smelting capacity in Ganzhou. It plans to produce 40,000 to 60,000 mt of rare earth, compared with China’s rare earth mining indicator of 90,000 mt for 2012.     

Back in May 2011, the State Council issued the Opinions on Promoting Sustainable and Healthy Development of Rare Earth Industry. According to the opinions, rare earth industry shall be dominated by large firms, and the industry concentration of top three ion-type rare earth enterprises must exceed 80%.

                  

China Minmetals Corporation, Chalco, China Non-ferrous Metal Industry’s Foreign Engineering and Construction (NFC), Jiangxi Copper, Rising Nonferrous Metals Share, Xiamen Tungsten and Ganzhou Rare Earth Industry all tried to join in the merging and restructuring of rare earth industry.

According to Mr. Zhang, Chalco has merged rare earth enterprises in Jiangsu. Rising Nonferrous Metals Share has been in charge of M&As of rare earth companies in Guangdong. Ganzhou Rare Earth Group will be responsible for rare earth industry integration in Ganzhou. China Minmetals Corporation intends to join in restructuring of Guangdong’s rare earth industry following its acquisition of some rare earth enterprises in Jiangxi, Guangxi and Hunan. Baotou Steel Rare-Earth will be responsible for M&As in rare earth industry in north China.

Rare earth industry restructuring in south and north China is led by Ganzhou Rare Earth Group and Baotou Steel Rare-Earth, respectively.

Light rare earth in north China is concentrated in Baotou in Inner Mongolia, Liangshan in Sichuan, Weishanhu in Shandong, while heavy rare earth in south China is centered on Jiangxi’s Ganzhou. Baotou Rare Earth, is actively seeking alliance with enterprises in Sichuan and Shandong.

Baiyun Erbo Rare Earth Mine is China’s biggest rare earth mine, containing 87.7% of rare earth. As Baotou Steel Rare-Earth’s rare earth industry integration accelerates, it will have access to more rare earth.

Heavy ion-type rare earth in Jiangxi accounts for roughly 40% of China’s total ion-type rare earth reserves, most of which is located in Ganzhou. All rare earth mining rights in Ganzhou are exclusively owned by Ganzhou Rare Earth Group.

Rising Nonferrous Metals Share also owns large quantities of rare earth. In comparison, China Minmetals Corporation and Chalco have less rare earth.
 

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There might be a crack in China's domination of rare earth metals – a mud-filled crack, thanks to a discovery by Japanese scientists. Vast reserves of rare earth metals that can be mined cheaply have been found in deep-sea mud on the Pacific ocean seabed. These essential metals are needed for a wide range of technologies – from consumer electronics like smartphones and TVs to advanced weapons systems and hybrid and electric vehicles.

"We have found deposits that are just two to four (meters) from the seabed surface at higher concentrations than anybody ever thought existed, and it won't cost much at all to extract," said professor Yasuhiro Kato from Tokyo University, the leader of the team, to The Telegraph.

                  

Some of the rare earth metals are found in other parts of the world, but the heavier metals such as dysprosium, terbium, europium, and ytterbium are the most important. After driving rivals out of the business in the 1990s, China became the source of 97 percent of these heavy rare earth metals. In 2009, China decided to restrict exports, which caused protests and legal complaints from the US and the European Union. China's actions also motivated more companies to set up shop in China to access the rare earth metals.

The team of Japanese scientists first discovered the Pacific ocean reserves two years ago, with that supply possibly being 1,000 times the supply of land-based deposits. The team's latest discovery is in Japan's Exclusive Economic Zone in deep-sea mud. It's 5,700 meters below sea level around the island of Minami-Torishama. The researchers says that while the rare earth metals are down deep, they can easily be distracted with minimal disturbance off the seafloor using pressurized air.

Professor Kato thinks the exploration will take another two years before it can be scaled up for production. Over 50 percent of the discovered deposit is heavy rare earth metals and they doen't need the radioactive by-product thorium that makes the metals hard to mine in China.


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Hafnium, indium, neodymium, erbium, europium...These are a few of the rare earth metals that make up most of the electronic guts of the world’s high technology.

“Rare earth” refers to the scarcity of easily-mined ores of the elements. Last month, we discussed a breakthrough in large-scale electrolysis that could make refining these ores and oxides much easier; now, Japan’s announcement of the discovery of a huge deposit of rare earths could make the market that much more competitive.

For us, that means cheaper electronics. If Japan can produce its own rare earth metals, as opposed to depending on imports from China (where 97 percent of rare earth metals in the world are produced), then China will have to lower its own prices on metals to remain commercially competitive. Breaking China’s monopoly on rare-earth resources could have wide-ranging consequences for the entire electronics industry.

This is the second major deposit discovery made by Japan in the last two years. A team led by Yasuhiro Kato of the University of Tokyo found caches near Hawaii and Tahiti in 2011 that were so rich in rare earths that one square kilometer of seabed could produce as much as 20 percent of the world’s annual consumption. Now, they’ve discovered a second plot of rich mud at the bottom of the Pacific.

Undersea mining has its own set of environmental issues; it’s not entirely clear yet how the techniques used can disrupt deep-sea life. Kato and his team will be investigating the new cache in a two-year study before attempting to start the mining process.


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