The utilization rate of China's rare earth export quotas fell from 52.01% in 2011, to 48.75% in 2012 due to sluggish demand.

As rare earth supplying countries increased, rare earth prices should fall slightly further this year.

According to an analyst Chen Jiazuo, China's rare earth prices will generally fall throughout 2013.

Investments in rare earth grew as China is attempting to gain more negotiating power over pricing, which caused prices to fluctuate.

China's domestic consumption grew 7% MoM.

China has executed export quotas for rare earth since 2006, and prices had been rising. But the global financial crisis which occurred in 2008 pushed down rare earth prices again.

In order to stimulate economy, China began to implement stimulus policies, causing rare earth prices to climb in 2010, and were pushed up to a near-year-high in July 2011 by speculation capital.

But due to high prices, sluggish global economy and low demand, rare earth price index plunged from 15, to 5-6, and had been falling since then.

Chen Jiazuo reported China will continue to implement exploration quantity and separated products production plan for rare earth in 2013, with total volumes flat with 2012, and rare earth prices will fall further, which will given incentive to downstream consumption. China's rare earth consumption in 2013 should reach 90,000 mt, up 7% MoM; global total rare earth consumption is expected to be 130,000 mt.

China's total rare earth exploration volume planned in 2012 was 93,800 mt, with consumption of 84,000 mt.

                       

Exploration of Other Suppliers

China has 23% of rare earth in global total volume, and supplies 90% of rare earth to the world. Due to high price and expensive costs, US, Europe and Japan began to seek for other suppliers outside China, and actively explore substitute products for rare earth.

The most influential explorations are the Mountain Pass mine by Molycop and Weld mine by Lynas

China will continue to implement rare earth export regulations in 2013, with export quotas level with 2012. In 2012, China's export quotas for rare earth were 30,966 mt.

China's utilization rates of rare earth export quotas 2011 and 2012 were 52.01% and 48.75%, respectively, due to soft demand.
　　
As global rare earth supply increased, rare earth prices should fall slightly in 2013.
 

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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.


Rare Earth Manufacturer & Supplier: Chinatungsten Online - http://www.chinatungsten.com
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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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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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