Ryan Castilloux’s State of the REE Market Address

The Mining Report: This year we’ve seen a modest rally for specific rare earth elements (REEs), namely terbium, dysprosium, praseodymium and neodymium. Has this bolstered the near-term outlook for rare earth exploration and development projects outside of China?

Ryan Castilloux: It has. The recently announced supply agreement between Molycorp Inc. (MCP:NYSE) and Siemens AG (SI:NYSE) is a reflection of how the outlook is improving. The rally we saw earlier this year is an indication that markets for certain rare earth elements are becoming increasingly tight. Without a boost in global production to meet growing global demand, we will see continued strength behind magnetic rare earth prices and several others.

Namibia Rare Earths Inc.’s Lofdal has relatively low preproduction capital requirements.

Until a few weeks ago the Chinese FOB price of terbium oxide was up nearly 50% year-to-date and dysprosium oxide and neodymium oxide were up about 30%. Prices for these oxides have since given up some of their gains as a result of slow buying ahead of China’s upcoming export tariff changes, but I expect the prices of these rare earths will resume their upward momentum once buying resumes midyear. Exasperating the future supply/demand imbalance of certain rare earths is China’s continued effort to suppress unregulated rare earth production, particularly in China’s heavy rare earth-rich southern provinces, which will result in declining global production of terbium, dysprosium, yttrium and other heavy rare earths if new sources of supply don’t come onstream.

TMR: Do you think this will spur much investor interest?

RC: The rally in the early part of 2015 pushed a lot of marginal projects into the economically attractive category, but with the volatility that we’ve seen in recent years we need to see prices not only rise, but maintain a level that will restore investor confidence. We’re …read more

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