Tom Hayes’ REE Stock Picks

In a recent interview with The Mining Report, Tom Hayes of Edison Investment Research identified the three rare earth element (REE) companies he believes will achieve success. He thinks they have the advantage of having heavy and strategic REEs and the ability to gain funding.

Those types of REEs are valuable because:

It’s really their use in particular applications such as green technologies. Wind turbines are a case in point. Political support for renewable energy sources drives further development of wind farms and, by extension, boosts actual demand for the metals used in those applications.

Hayes also discussed REE demand and prices:

Edison doesn’t have specific growth forecasts for REEs, but the industry consensus is annual growth anywhere from 3–8% until 2020. What will that mean for the supply and demand of particular REEs? This is an industry that is plagued by misnomers. When REEs were first in the limelight in 2011, when the bubble was forming, there was a complete lack of understanding of what ‘rare earths’ meant.

Since then, people have begun to understand the difference between light rare earth oxides (LREOs) and heavy rare earth oxides (HREOs). The industry has now become an even more granular and complex story about the actual supply and demand drivers with regard to particular REEs. When we talk about REE demand growth, we must consider specific minerals among the 16 REEs. To comment on where REE prices are going is not particularly useful.

Click here to read the full Mining Report interview.