Rare Earth Market Focused on Molycorp Profit Rise

The rare earth market has recently been surprisingly subdued in comparison to the drama and legislative battles reported over the first quarter of 2012. For the first time in a long while, the headlines have been dominated not by China, but by the progress being made by rare earth exploration and production companies.

Molycorp profits surge

Investors worldwide were likely watching closely as rare earth miner Molycorp Inc. (NYSE:MCP) posted a sharp rise in quarterly profit as both realized prices and sales volumes surged.

The company confirmed that it has begun operations at its new mill, separator, and tailings facility at its Mountain Pass mine in California. According to a press release, first quarter revenues at Mountain Pass increased 69 percent over first quarter 2011 levels to $44.5 million, based on 586 metric tons (mt) of rare earth oxide (REO) equivalent. First-quarter adjusted profit rose to $18.3 million from $2 million in the year earlier period.

“We will be producing rare earth concentrate as a result of all of these portions of the facility starting up,” said Mark Smith, President and CEO. “In terms of mining operation, this really means that you’re ready to go.”

The company also stated that it will stockpile some of that concentrate as feedstock for a separation plant at the site scheduled to start up later this year. The rest will be processed at the mine’s separation facilities in Sillamae, Estonia.

Lynas production finally on track

Lynas Corporation Ltd. (ASX:LYC) announced that it is on track to start up its rare earth plant in Malaysia next month after an official in the country called it “the safest rare earths plant in the world.”

Operations at the plant in Kuantan, under construction since 2010, have been held back for some time as residents and local politicians expressed concerns about radioactive waste contaminating the environment.

Pol Le Roux, Vice President of sales and marketing for Lynas, said he believes a public hearing set for May 21 in Kuala Lumpur will be the final step in the process.

“We have no knowledge of any other procedure, hence we feel comfortable – reasonably comfortable, because we have learned in the last six months that you have to be careful – that we should get it by June this year,” he said.

Rare earth research centre

Growing public interest in rare earth elements (REEs) has prompted the Universiti Malaysia Pahang (UMP) to set up a Rare Earth Research Centre to enable more research on the commodities.

UMP vice-chancellor Professor Datuk Dr Daing Mohd Nasir Daing Ibrahim noted that it is an “opportune time” to focus research on REEs, pointing specifically towards the current issues surrounding the Lynas rare earth processing plant in Kuantan.

Following the announcement, UMP deputy vice-chancellor Professor Badhrulhisham bin Abdul Aziz said UMP is planning to carry out an environmental baseline study in Gebeng in collaboration with the Karlsruhe Institute of Technology (KIT) and other Asian-based universities.

Badhrulhisham said the collaboration with KIT will focus on radioactive monitoring and assessment, while that with Peking University will highlight the processing aspect of rare earth separation processes.

Market price update

Cerium mischmetal prices plunged last week to trade at $62 to $67 per kilogram, while Europium oxide remained flat.

Dysprosium oxide prices saw little change, closing at RMB4,700 to RMB4,900 per kilogram.

Other rare earth price points, including neodymium, yttrium, and terbium metal, all traded sideways for the week, with no notable price fluctuation.

Junior company news

Quest Rare Minerals Ltd. (TSX:QRM) has provided a summary of metallurgical test results from its Strange Lake B-Zone deposit.

According to a company press release, acid consumptions of approximately 200 kg/ton are being achieved with REE dissolutions in the 90 to 96 percent range, niobium dissolutions in the 93 to 96 percent range, and zirconium dissolutions in the 85 to 93 percent range.

Quest added that uranium and thorium has been successfully extracted from the circuit with the intention of producing an environmentally-stable discharge product, and noted that significant work has been carried out on niobium and titanium separation.

“The metallurgical test results from the Strange Lake B-Zone are extremely encouraging,” said Peter J. Cashin, Quest’s President and CEO. “The relatively simple flow sheet has demonstrated recoveries significantly higher than those achieved in previous test work for Strange Lake, and also higher relative to our peers in the rare earth sector.”

Rare Earth Metals Inc. (TSXV:RA) announced an initial NI 43-101 compliant independent resource estimate for its Lavergne-Springer REE deposit in Ontario.

Highlights of the estimate include 4.167 million tonnes grading at 1.14 percent total rare earth oxide (TREO) at a 0.9 percent TREO cut-off grade in the indicated category, as well as 12.732 million tonnes grading at 1.17 percent TREO at a 0.9 percent TREO cut-off grade in the inferred category.

According to the company, neodymium content is 17 percent of the TREO in the indicated category and 15.6 percent in the inferred category, and the resource areas remain open along multiple directions and to depth.

Securities Disclosure: I, Adam Currie, hold no direct investment interest in any company mentioned in this article.