Molycorp and Lynas Continue to Battle Falling Rare Earth Prices
NEW YORK, 10/22/12 - Prices of rare earths, which are used in a variety of product from smartphones to hybrid cars, soared last year as China clamped down on foreign exports. Since then prices have tumbled as new supplies were introduced to the market and weak economic growth from China have led to eased policies on exports. Five Star Equities examines the outlook for companies in the Rare Earth Industry and provides equity research on Molycorp Inc. (NYSE: MCP) and Lynas Corp. Ltd. (PINKSHEETS: LYSCF).
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China in August raised export quotas on rare earth elements (REE) by 2.7 percent, which was the first increase in five years. The surge in prices last years prompted producers outside of China to ramp up new mining projects and have also boosted global supply. New production from Molycorp and Lynas coming online in the fourth quarter are expected to cause prices to fall further.
"This is the first time in five years that the REE quota has increased and is the highest in three years, which is seen as a slight negative as excess supply would put pressure on prices," said Carolyn Dennis, Dundee Capital Markets analyst, in a note to clients.
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Molycorp is a leading rare earths and rare metals company, and combines a world-class rare earth resource at Mountain Pass, California, with advanced, high-purity rare earth and rare metal materials processing capabilities. The company's Project Phoenix expansion is expected to boost production to 19,050 metric tons by the end of 2012.
Lynas is set to provide the first new source of supply of Rare Earths outside of China when it comes online in 2012. Shares of the company fell sharply after a court ruling earlier this month further delayed production at their rare-earth refinery in Malaysia. "Arising from the delay that these proceedings have caused to Lynas, the target first feed to kiln date will be delayed to a date later than the previously advised date of October 2012," the company said in a statement.
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