TORONTO (miningweekly.com) – Rare earths prices, which have plunged as users pursue alternatives and the broader economy stalls, are set for further drops, Technology Metals Research founding principal Jack Lifton said on Wednesday.

While he does not see any further collapse in rare earths prices, in an interview with Mining Weekly Online he does predict clammed-up capital markets coupled with lower prices will kill off around 90% of the publicly listed rare-earth juniors over the next two years or so.

Rare earths prices rocketed in the two years up to mid-2011 as China, which accounts for over 90% of global production cut output and exports in what it said was a bid to improve the industry’s environmental record.

Junior companies in the West rode the wave of interest and speculation the shortages that ensued caused, in a manner not too dissimilar from the uranium mania that rocketing nuclear fuel prices brought about in 2007.

In both cases, the party came to an abrupt end, and many rare-earth juniors have seen their market values more than halved since the start of 2011.

Now some juniors are struggling to raise cash to fund their projects.

“There are too many companies in the supply side and not enough on the demand side, so a lot of the supply side will be eliminated by the market effect that they will get no money,” Lifton said.

Technology Metals Research tracks over 300 companies involved in over 400 rare-earth projects around the world, but only a fraction of these will see the light of day.

“Sooner or later there’s got to be an enormous falloff. By 2014, we’ll see 30 or 40 companies left – at the most,” said Lifton, speaking after delivering a speech titled ‘The key drivers for supply and demand for non-Chinese rare-earth products’ at the Technology Metals Summit in Toronto.

On the price side, he said that while “still high” they would likely pull back further, without collapsing.

Neodymium, used in high-strength magnets that go into hard drives, electric vehicles and wind turbines, for example, saw its price rise by around ten times between 2009 and 2011, to over $300/kg.

Lifton predicts the price will fall to around $100/kg. It is currently selling for some $220/kg free-on board in China, according to Metal Pages.

Dysprosium could more than halve to $1 000/kg from current prices around $2 500/kg, he said.

“The producers cannot stop raising the prices or it becomes self destructive,” added Lifton.

Car makers and wind turbine manufacturers have already been cutting their use of rare-earth elements because of the astronomical price increases in the last couple of years.

“It’s not gold. It’s a utilitarian metal – if it’s too expensive it will be used less,” said Lifton.
 

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