Rare Earth Stocks Gain on Chinese Mine Closures

Critical Metals

Chinese officials are shutting down mines illegally producing rare earth concentrate and that is having a positive effect on rare earth stocks and prices.

Rare earth stocks showed signs of life last week as officials in China continue to confiscate concentrate produced from illegal mines.

The Chinese government has tried to stem the practice of illegally mining rare earths since 2012 when it stopped production of about 30,000 metric tons of rare earths. The latest crackdown involved shuttering mines in the province of Ganzau.

The Market Vectors Rare Earth Strat Met ETF, (NYSE:REMX) a collection of domestic US and foreign rare earth companies, was up 4.9 percent over the last five days against a year-to-date loss of 24.8 percent. Market barometer Molycorp (NYSE:MCP) bounced 23.2 percent over a week, while competitor Lynas (ASX:LYC) was up 15.5 percent. Molycorp was also upgraded to a “strong buy” from equities analyst Byron Capital, according to a research note sent Friday.

Other REE companies followed suit with weekly share price increases, including Avalon Rare Metals (TSX:AVL) (+37.7 percent), Tasman Rare Metals (TSXV:TSM) (+25.7 percent), and Ucore Rare Metals (TSXV:UCU) (+16.6 percent).

Pr/Nd, Dy prices up

The crackdown was also good for rare earth prices. Metal-Pages reported that prices of praseodymium/neodymium and dysprosium prices remained strong in China last week, although demand was quiet. The priced of 99% praseodymium/neodymium metal was being offered at RMB380,000 per tonne compared to a range between RMB350,000 and 360,000 earlier in the week. Dysprosium oxide prices were holding firm at RMB1,650 to 1,700 a kilogram, while the prices of gadolinium and praseodymium oxide were up due to tight supply, according to Metal-Pages. Europium and lanthanum prices remained flat.

Company news

Lynas Corp said on Friday it expects demand for rare earths to pick up soon considering current low prices and lack of inventory among key industry players, Borneo Post reported.

“There will be some segment or market which would run out of rare earths by the end of this year, since the last time most of the companies bought the products was in 2010, when the price was still low,” CEO Eric Noyrez was quoted saying.

Lynas recently implemented a minimum price schedule that took effect on July 1st.

Forte Energy (ASX:FTE, LSE:FTE) has increased its exploration portfolio in Africa by acquiring unlisted Leo Mining and Exploration. Leo has a 48 percent stake in Mkango Resources, (TSXV:MKA) which is advancing the Songwe Hill rare earths project in Malawi. Forte Energy is exploring for uranium in Guinea and Mauritania, where it has JORC-compliant resources 44.9 million pounds of u308.

In a separate release, Mkango said on Wednesday it has a base case metallurgical flow sheet to produce a high-grade mixed rare earth carbonate or hydroxide product.

The proposed flow sheet uses conventional flotation technology, followed by leaching of the mineral concentrate with hydrochloric acid, then precipitation and purification.

Canada Rare Earth Corp (TSXV:LL) has put a second $50,000 deposit down on a rare earths refinery in the Pacific Northwest region of the United States. The company is aiming to establish light and heavy rare earth refineries in up to five countries with combined annual capacity of 15,000 metric tons of separated rare earth oxides. Its partner, CEC Rare Earth Corp., is investigating sources of rare earth concentrates.