In tumbled trend of rare earth prices throughout 2012, during the state and enterprises to take a premium Shouchu discontinued insured and other measures were not rare earth prices can significantly rising trend. According to publicly available data, in 2012 about 40% year-on-year decline in the annual average price of rare earth, close to being "cut." Dysprosium oxide and terbium oxide average market price of the more significant reduction in the price declines of 40% and 46.6%. However, the export of of lanthanide products and cerium but contrarian rose year-on-year growth of 41% and 84% respectively, the price decline is also smaller. Can be seen, the larger decline in export prices of heavy rare earth elements such as dysprosium, terbium, and the light rare earth exports impact on a smaller scale.

The still general consulting metallurgical industry analysts pointed out that the fourth quarter of 2011, so far scarce rare earth prices by illegal private mines and overseas mining heavy volume, was a the shock downward trend, but the southern ionic rare earth minerals for our unique, rich in heavy The rare earth elements, there are obvious advantages compared to overseas rare earth mine in the reserves and grade. So the next few years is expected the heavy rare earth prices will gradually rise, light rare earths by the heavy volume of overseas mines will maintain low volatility. Heavy rare earth prices rise, mainly due to the following:

First, the heavy rare earth reserves are very limited. Based on USGS data show: the world's total rare earth reserves of 110 million tons, the Chinese reserves accounted for 50% of the approximately 55 million tons, which only 3% of China's reserves of about 165 million tons of proven reserves of southern China's rare earth ionic, therefore, rare earth ionic annual output of 50,000 tons of dollars static reserve-production ratio of less than 37 years, and this the main varieties of the ore in gold. The heavy rare earth is only part of the rare earth ionic, so more scarce. According to the agency is expected in the next world, more than 80% -90% of the heavy rare earth demand will continue from China to meet.

Second, will accelerate the reduction of the heavy rare earth stocks. The main reason for the decline of heavy rare earth prices in the near future is that pre some countries, as foreseen in the heavy rare earth scarcity to import large quantities of the formation of the stock, while the economic crisis lead to downstream companies cut a short-term oversupply situation, so the heavy rare earth. As the economy rebounds, the downstream enterprises will accelerate the consumption of existing inventory of heavy rare earth new demand will rapidly increase.

Third, the Southern rare earth industry will accelerate the integration. Another reason is that the Southern small mines stealing stealing and selling heavy rare earth prices. Currently, relevant departments have formulated relevant industrial policies, to increase the punishment for the rare earth indiscriminate digging of private behavior, Southern Rare Earth resources in the province are encouraged to promote the industry consolidation. Industry consolidation is complete, the efforts to control production and prices for the heavy rare earth will be greatly enhanced.

Other hand, according to the agency expects that by 2015, lanthanum, cerium, praseodymium, neodymium and four light rare earth ore production in China of the world's total output than will decline from 94% in 2010 to 61% in 2015. Moreover, the future of the four light rare earth ore production will increase every year. This will greatly ease the contradiction between supply and demand of the light rare earths, so future prices will be difficult to improve.


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Rare Element Resources Ltd. is pleased to announce rare earth element (REE) assay results from the final core holes completed during the 2012 drilling program at the Company’s 100% owned Bear Lodge property, located in northeastern Wyoming, USA. The drilling results confirm that the Bear Lodge deposits contain high grades of total rare earth oxide (TREO), including high abundances of combined Critical Rare Earth Oxides (CREOs).

Dr. James Clark, Vice President of Exploration for Rare Element Resources, states “Assay results are now in from all of the development and exploration core holes drilled during our 2012 program. We are extremely pleased with the results as most recent drill results confirm and further expand the quality and continuity of the Bull Hill REE deposit and the Whitetail Ridge resource area. We expect to significantly increase the Measured and Indicated resources in those deposits in preparation for the upcoming definitive Feasibility Study (dFS). Further, the results confirm the zones of HREE-enrichment (Eu, Tb, Dy, and Y) at Whitetail Ridge and Carbon and illustrate the significance of this world class source of CREOs.”

                    

Critical Rare Earth Oxides (CREO)

Critical rare earth elements (CREEs) are those with the highest value, and for which the strongest future growth is projected. We refer here to the oxides of Nd, Pr, Eu, Tb, Dy, and Y as Critical Rare Earth Oxides (CREO). In 2011, the Company identified significant HREEs (Eu, Tb, Dy, and Y) in leached FMR (F (FeOx)-M (MnOx)-R (REE minerals)) and oxide-carbonate dikes at the Whitetail Ridge resource area, and at the East Taylor and Carbon target areas (see news releases dated 4 August and 27 October 2011, and 10 December 2012). The current set of assay results from the Whitetail Ridge resource area and Carbon target confirm those important observations. Examination of aggregate significant intercepts from past drill results and the current set of drill assay results indicate that there is a district-wide zonation in which the strongest TREO enrichment occurs within a central zone focused on the Bull Hill and Bull Hill Northwest deposits, while the strongest HREE (Eu, Tb, Dy and Y) enrichment is found in mineralization peripheral to the central zone and focused at the Whitetail Ridge deposit, and at the Carbon and Taylor REE target areas (Table 1 and Figure 2). The peripheral enrichment zone is ascribed to a late-stage, low-temperature hydrothermal event.

Objectives of the 2012 Drill Program

The objectives of the 2012 drilling program were to expand and upgrade the district’s resource categories at the Bull Hill and Whitetail Ridge oxide deposits, and to further delineate the HREE (Eu, Tb, Dy, and Y) enrichment at the Whitetail Ridge resource area and Carbon target area. The drill results emphasize a Bear Lodge district-wide REE zonation, with a central zone of strong TREO enrichment that gives way to a peripheral zone with significant TREO and strong Eu, Tb, Dy, and Y enrichment.

The assay results from 35 core holes are announced in this release and include assays from 15 core holes at the Bull Hill REE deposit, 18 holes from the Whitetail Ridge resource area, and 2 holes from the Carbon REE target area.


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Monday rare earth market is still deserted, traders slightly mobilize quotes, concentrated in the lanthanum, cerium, gadolinium. Most cargo operators who offer more stable.

Market quote a higher degree is still concentrated in the oxide, gadolinium oxide, praseodymium, neodymium, addition some traders Alerts cheap gadolinia, market inquiries and turnover of other oxides are weak. Insiders reflect gadolinium oxide is a tax 140,000 yuan / ton, there are many traders very price including tax 150,000 yuan / ton. Praseodymium neodymium oxide market tax price is still $ 31-32 million / ton, excluding tax 26.3-26.5 yuan / ton. The lanthanum cerium-based oxide prices are still down 39 lanthanum oxide tax 3.6-3.8 yuan / ton, 395 cerium oxide tax of 3.5-4 yuan / ton offer both. Lanthanum cerium metal offer more stable, Baotou traders tax offer 60,000 yuan / ton, the Ganzhou traders offer slightly higher.
 

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Exact statistics are difficult to come by in the rare earths field, partly because there is no official statistics agency, partly because they rely on Chinese sources where smuggling occurs, and partly because the end uses are so disparate. The Industrial Mineral Corporation of Australia (IMCOA) are widely respected and gave some updated numbers in a November 2012 presentation.

The anticipated rare earth supply for 2012 was estimated at 112,500 tonnes of rare earth oxide against production of 106,000 tonnes. Global production of heavy rare earths at 7,000 tonnes was 40% below the estimated 10,000 tonnes demand with almost all of this being produced in China. Global demand is expected to increase to 160,000 tonnes by 2016 and to 220,000 tonnes in 2020. Demand for heavy rare earths is expected to increase 45% but supply expected to remain static at 7,000 tonnes.

          

The five elements which drive the economics of rare earth production (what Frontier calls the “Big 5” are neodymium, praseodymium, dysprosium, terbium and europium. The two demand sectors which consume the majority of these elements’ production are magnets and phosphors. IMCOA sees demand for these increasing rapidly, which will help to support their prices while other elements – such as lanthanum and cerium – may be in oversupply.


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Rare earths is a term commonly used to describe the 15 chemically similar, lanthanide elements which appear together towards the bottom of the Periodic Table. Two other elements, yttrium and scandium, which have similar chemical properties, are often also referred to as rare earths. Rare earths can be divided into "light" rare earths and "heavy" rare earths and both are present to varying degrees in all rare earth deposits. Rare earths are therefore recovered and processed together before sequential separation into individual rare earth elements. Prices for individual rare earths in pure oxide form can vary significantly with, generally speaking, the heavy rare earths trading at higher values. It should be noted the highest value heavy rare earth elements, namely europium, terbium and dysprosium, are contained at elevated levels at Zandkopsdrift by comparison to a number of other similar deposits being evaluated globally. It is also noteworthy that both the thorium and uranium content of the Zandkopsdrift resource are relatively low, at average grades of 178ppm and 47ppm respectively.

The oxides produced from processing rare earths are collectively referred to as rare earth oxides. Although rare earths are relatively common in the earth's crust, they often do not occur in high enough concentrations (or occur along with high levels of radioactive elements) to make their extraction economic. The oxides that are produced from processing the rare earth elements constitute the basic material that can be sold to the market or further processed into metals or alloys.> Their location in the periodic table is shown below.

        


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China is effectively the monopoly supplier of rare earth elements in the world today. It became the dominant supplier by producing and supplying rare earths in the 1990s and early 2000s at a price western producers could not compete. As a result China anticipated Chinese production in 2012 is 96,000 tonnes according to a November 2012 presentation by industry consultants Industrial Minerals Corporation of Australia (IMCOA).

Chinese demand for rare earths has also continued to rise with organic growth for current applications and new applications have been found for many of the elements and in 2012 this is estimated to be 69% of global demand, or 79,000 tonnes. This is expected to rise to 107,000 tonnes by 2016. At the same time, China’s supply of rare earths is expected to fall as China tightens up environmental controls and curb illegal mining.

                  

The Chinese government is actively trying to consolidate the rare earth industry into major mining groups to assert state control over the supply of rare earths which it views as a strategic asset. These groups will centre on the 3 main rare earth production areas in China:

BaoTou Hi-Tech representing the Inner Mongolia government is taking the lead in the BaoTou area which predominantly produces light rare earths

JiangXi Copper Corp is taking the lead in consolidation in the Sichuan area which produces mainly light rare earths

In the Ionic clay region in the south of China it is expected that consolidation will result in 3 producing groups, China Minmetals, Chinalco and China Mining. This is where most of China’s heavy rare earths will be produced

As a consequence of the rising demand and limited supply China has introduced export quotas which have limited the supply of rare earths to the rest of the world. The Chinese export quota has been reduced substantially since 2005, from 65,580 tonnes to 30,996 tonnes in 2012.


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In accordance with the Ministry of  Land and Resources, Hunan province has issued an announcement about controlling the mining amount of the first batch of tungsten, antimony and rare earth mines respectively of this year. Requirements are as followed:

Firstly, according to the first batch of index: the index of total tungsten concentrate (with 65% content of tungsten trioxide) control is 11,300 tons, among which the main mining index is 9250 tons and comprehensive utilization indicators are 2050 tons; the index of total antimony ores control is 18,000 tons; as for ion rare earth ores, the index comes to 500 tons.

The annual index of total mining control should be referenced to the second batch of the Ministry of Land and Resources, and the order of the comprehensive testing result will be issued respectively after the analysis of industrial policies, marketing direction and the implementing situation of the first batch of index.

                   

Secondly, Hunan will continue to suspend accepting  new registering application for mining and exploiting tungsten, antimony and rare earth ores, except for those situations having been ruled in the announcement.

Thirdly, all those municipal and continental Ministry of Land & Resources should spare no effort to do the verification work and submit to the provincial Ministry in written form before Mar. 10, 2013. The unfinished index of the total mining control will have no effectiveness.

Fourthly, department of Land and Resource of all levels must take effective measures to strengthen the regulation. All industries should sign a total mining contract, strict implementation of the statistical reporting system, to ensure that the total mining control would achieve tangible results.


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Mining juniors, in general, and rare earth juniors, in particular, are contending with a lack of investment capital, and the writing is on the wall for many, as their projects remain too ‘early stage’, and much too ill defined with regard to end products and their markets, to attract capital (which is bearish and risk averse toward the resource sector at present).

Rare earth exploration juniors are at the edge of the cliff, and the culling of the herd is imminent for many of the blue sky/early stage projects that failed to deliver even an NI 43-101 compliant resource, much less an advance stage development document.

Such is the Darwinian nature of the markets, and there’s something to be said for the channeling of capital to the strongest individuals that remain standing in times of drought and famine.

                      

Two such survivors are Ucore (QTCQX: UURAF) and RER (ASE: REE), which are smallish, right size projects. In the case of Ucore their recent PEA delivered some metrics that set its Bokan property apart from the crowd…not the least of which is an almost absurdly low projection of the CAPEX required to get into production ($221M) and a product mix and form stated to be valuable enough to generate close to $100M per year in pre-tax profit (with a 43% IRR). That’s a bullish return on limited input capital. Ucore plans to be in production in 3 years or so, which places them at the forefront of the international race (along with, in my opinion, RER), to generate HREE’s outside of China.

Ucore estimates that they’ll be producing some 95 TPA of Dy; close to ½ of current US OEM automotive requirements and more than 10X the requirement of US Department of Defense (with which Ucore signed a strategic agreement in Q4 of 2012 for the purpose of advancing their HREE project). DOD is interested in Dy at least partially as an input component in unmanned drones in theaters of war (a topic that has garnered much media attention of late as a bulwark of the Obama administration’s offense strategy in the Middle East). Beyond this, UCU’s Dy output will be readily received by the American automotive industry, as prospective production of EVs and HEV’s continues to grow.

Ucore has yet another ace on the hole with the State of Alaska in their corner. The State has a long history of assisting in the financing of CAPEX to worthy mining projects, with very patient long term, below market interest loans over life of mine. Alaska has a $39B permanent fund, largely the outcome of a robust long term petroleum sector which is now falling into abeyance. So, they’re the rare sovereignty in the western world that has not only significant capital but also the wherewithal to invest in its own future. In Ucore’s case, the stated CAPEX is so low, that the State could singlehandedly guarantee Bokan’s rise to production (witness Alaska’s underwriting of $225M just for the port and road infrastructure at the Red Dog Mine in Central Alaska; an amount which ironically totals more than Bokan’s entire CAPEX requirement). As previously reported, the Goldilocks Principle will gain new credibility in the REE space, as it’s the right size project with the right products, Critical Rare Earths that will ultimately prevail. Ucore’s Bokan is such a project.


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Rijkers has updated his report on Northern Minerals (ASX:NTU) following the recent financing package totalling A$58 million coming from Chinese interests. Rijkers’ view is that Northern Minerals has differentiated itself from other REE explorers by focusing on metallurgical studies in conjunction with exploration programs. The company is expecting first production of mixed rare earths oxides in 2016, dominated by the heavies (yttrium 61.6% and dysprosium 11.6%).

Rijkers is more optimistic than most about the sector – well, at least the HREE end of it. He believes the heavy rare earths will come back into focus in 2013 as global equity markets rally to near all-time highs due to a marked up-tick in economic growth expectations and improved political clarity.

“The REE market is itself very small but enormous downstream markets rely on their input at differing stages of the supply chain. REE demand is driven predominantly by two of the fastest-growing economically sensitive areas: renewable energy and high technology,” he writes.

And, despite the low level of investor interest in the HREE equity sector, the past two years have seen industry participants bolster their efforts to secure supply. These efforts have included:

The U.S. establishing a $120 million REE research institute to development new methods of REE production;
The U.S. passing legislation to boost domestic REE production (especially NdFeB magnets critical to defence applications);
Strategic alliance formed between the U.S. Department of Defence and Ucore Rare Metals for dysprosium;
Japan has invested $1.3 billion in REE recycling programs;
Japan has offered $110 million in subsidies for REE projects that reduce its dependency on China;
The E.U. and U.S. have taken legal action through the W.T.O against alleged protectionist Chinese policy;
South Korea and Japan have invested in REE projects through their respective state-owned investment vehicles; and China has tightened environmental controls, implemented policies to create HREE stockpiles and sanctioned investments internationally in HREE projects.
Yet, as he says, the results so far have been muted.

                        

Rijkers continues: “Despite the volatility experienced in the REE sector, taking prices from historically low levels to astronomic heights and subsequently back to the levels of 2010, there are two divergent themes emerging. The rise in HREEs initially reflected the tight demand/supply of the market but also soared to unsustainable levels as speculators entered the market when Japanese demand collapsed due to the Fukushima disaster. This resulted in consumers cutting back based on price destruction which was compounded by the economic and political risks that took hold of the global economy in 2012.

“However, underlying demand for HREEs remains firm due to the robust growth of the downstream industries that they service and a lack of new HREE sources outside of China. There are no substitution materials or alternative technologies that can replace HREEs’ critical role in their respective supply chains without a material cost being incurred. There is also a seismic shift occurring within the demand picture of HREEs which is dominated by China and historically domestic production has exceeded domestic demand. China announced in 2011 that their HREE reserves are finite (8-12 years) and as their REE requirements shift away from lower value LREE applications towards higher value HREE applications, it is likely that China will become a net importer of HREEs over time.


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