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.
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