Paul Zink of Rare Element Resources Sees Higher Rare Earth Prices on the Horizon

Rare Earth Deposits & Mining / Rare Earth Exploration, Mining, Processing, & Uses

Date posted: 08/20/14

Paul Zink indicates that the Chinese government has started to stockpile rare earths again and that there is a lot of pressure building for higher prices. The big six Chinese firms that have been designated to consolidate the industry there have reported pretty poor financial results and continue to face an escalating cost structure - their environmental costs are going up. Their labor costs are going up. They are mining lower grades. One industry watcher has suggested that that prices need to be 20 percent higher just so the Chinese can handle the new environmental rules alone. In other words, Zink suggests that prices will start to go up because Chinese producers, which account for some 85-90 per cent of global rare-earth production and 65 per cent of consumption, will inevitably have a great impact on the overall market. Zink identifies three major areas of demand - The magnet alloys, which are critical to miniaturization, allowing for the design and production of smaller and ever more powerful electric motors. Neodymium, dysprosium, terbium and praseodymium will continue to enjoy strong market demand. The metal alloys will draw demand from battery manufacturers especially thanks to the growing market for electric and hybrid cars, which have a promising future. Lanthanum has drawn less reaction from the markets and is slated to attract more interest because of the automotive market in places like China. Catalysts will see rising demand, especially in response to the use of heavier crude oils to refine gasoline and other fuels.