TORONTO (miningweekly.com) – Rare earths prices could jump if a rumour is true that China’s State Reserve Bureau (SRB) plans to start buying these critical metals soon, prompting shares of US producer Molycorp to rise $0.40 apiece in Tuesday morning trade on the NYSE.
The China Securities Journal was quoted by the Shanghai Metals Market (SMM) news service on Tuesday as having learnt from several sources close to the SRB that buying rare earths could start soon, despite no public announcement having been made.
The SMM said Chinese rare earths producers were suffering from lacklustre global demand as the global economy was struggling to gain momentum, which had squeezed margins at many Chinese producers.
Black-market smuggling of the metals used in a wide range of modern applications, ranging from hardening steel to consumer electronics and batteries, have also had a negative impact on Chinese margins.
The Chinese Industry and Information Technology Ministry estimated that in 2012, illegal mining of rare earths amounted to more than 40 000 t, and the illegal smelting and separation of rare earths products amounted to more than 50 000 t.
To counteract this, the Chinese government was making a concerted and sustained effort to crack down on illegal rare earths mining and to improve the environmental and safety compliance of the Chinese rare earths industry.
Further, the SMM also reported that Chinese producers were facing greater international competition from emerging rare earths producers, as significant rare earths consuming countries such as Japan and Russia had started developing alternative rare earth sources.
However, it was revealed at the fifth Baotou Rare Earth Industry Forum early last month, that the Baotou Rare Earth Exchange, in Inner Mongolia, would start operation in October, which would help to regulate the market and deliver pricing power. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co, the world’s largest rare-earth producer, initiated setting up the exchange.
Rare Earths producer Lynas Corporation’s CEO, Eric Noyrez, last week said at the Metal Pages Rare Earths conference in Guangzhou, China that global rare earth demand was expected to grow by 5% to 6% a year before 2020.
Lynas estimated China produces about 90% of the world’s rare earths supply and consumed more than half of this in its own market, which itself continued to grow.
China was expected to produce about 90 000 t of rare earths this year.
In recent times, Molycorp, which had often been considered the standard-bearer for the rare-earth-element sector away from China, reported disappointing earnings that sent its stock sliding.
Molycorp in August reported a wider quarterly loss even as revenue rose, hurt by a sharp drop in prices.
By 13:00 Eastern Daylight Time, Molycorp’s stock had gained 6.22% to change hands at $6.83 apiece.