Lifton vs Kingsnorth: Don’t Believe Lynas Corp, Molycorp Hype?

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Celebrity Deathmatch Copyright: MTV

Celebrity Deathmatch Copyright: MTV

In the wake of this month’s Rare Earths MMI® reading – tracking more than 10 rare earth prices within the MetalMiner IndX, and dropping 7.4% – we thought it appropriate to frame 2 opposing arguments into something akin to Celebrity Deathmatch” for the rare earths sector. (Ok, that may be a way over the top, but it’s no secret that disagreements abound over how bullish or bearish one should be on the REE markets!)

Compare with last month’s trends – here’s our free September MMI® Report.

In One Corner: Jack Lifton!

Lifton, who runs Technology Metals Research along with Gareth Hatch, lays out his case for China’s continued dominance in the rare earths industry in an article published back in mid-September. Some key statements:

  • “More sophisticated, or at least more knowledgeable, writers like to point to the fact that what was once even more than 95% is now dropping because of the new production from Molycorp and Lynas. The projected drop (projected because it is based on full production, which neither company has yet achieved) could bring Chinese dominance in total rare earth production from 95% to a mere 60% or less. But this is all very misleading, because this could only come about if Molycorp and Lynas were both able to not only produce at their targeted capacities but also to sell their output competitively against the Chinese producers.” [Ed. note: Bolding is our own]
  • “If (as the Chinese plan to do) they convert their economy from an export driven to a consumption driven model then their internal consumption of rare earth permanent magnets, specialty rare earth structural alloys, lighting and display phosphors, and medical imaging chemicals will skyrocket.”
  • “China is not standing still in all of this. Even as we debate the risk of investing in [other] companies Chinese investors and mining companies are scouring the world for such opportunities. They, the Chinese, do not have the goal of developing natural resources, overseas (to them) to make a profit; they have the goal of assuring Chinese continued access to the critical rare earths necessary to underpin the growth of their high tech manufacturing economy so that Chinese domestic consumption can grow.”

In the Other Corner: Dudley Kingsnorth!

Kingsnorth, a professor at Curtin Graduate School of Business at Curtin University in Australia – whom MetalMiner had the pleasure of interviewing in 2009 – has gone on record disagreeing with Lifton on Lynas and Molycorp, as in this article published in July. Key statements:

  • “For a while Jack has been trumpeting the ultimate demise of Lynas and/or Molycorp…Jack is very fond of making predictions based on miss-information [sic]. Myself and several others recall him stating at a rare earths conference in China a few years ago that ‘Molycorp will never produce a kilogram of rare earths’. Undoubtedly, his knowledge and understanding of the industry has improved since then, so perhaps he could provide us with some ‘guidance’ as to when his favoured 5 rare earths companies are likely to be in production”
  • Yes, the rare earths sector is still experiencing uncertain times, but now is not the time to conclude that ‘we are all doomed’. The current journey to the start-up of Mt Weld [Lynas’ site] commenced some 20-25 years ago and Mountain Pass [Molycorp’s site] some 5-10 years ago. Unfortunately, they still need more time. Rome was Not Built in a Day.”

Both gentlemen are esteemed and renowned analysts in the rare earths space, and each may have good points – until that Chinese domestic consumption boom that Jack talks about fully hits its apex, we may continue to see these dropping prices – the question is, are these depressed price trends a vote of confidence for any Western producers to begin supplying global markets?

MetalMiner‘s monthly Rare Earths MMI® dropped yet again, registering a value of 25 in October, a decrease of 7.4% from 27 in September and a new all-time low:

Rare-Earths_Chart_October-2014_FNL

The Rare Earth Price Movers

Following a 10.3% decline in price, europium oxide finished the month at $423.55 per kilogram. After falling 4.8%, terbium metal finished the month at $651.61 per kilogram. At $61,089 per metric ton, neodymium was down 3.8% for the month. The price of yttrium closed the month at $43.98 per kilogram after dropping 3.6%. Praseodymium neodymium oxide prices fell 3.2% to $49,685 per metric ton. Last month, dysprosium oxide prices dropped by 0.7% to $236.21 per kilogram.

The Steady Eddies

Hovering around $48,056 per metric ton for the month, neodymium oxide remained unchanged. Last month was consistent for lanthanum oxide, which did not move from $2,606 per metric ton. Yttria held pat last month at $6,516 per metric ton. At a price of $4,073 per metric ton, rare earth carbonate did not budge the entire month. Cerium oxide experienced a flat month, staying around $2,444 per metric ton. The price of samarium oxide held steady around $3,014 per metric ton last month. Prices for terbium oxide remained constant this past month, holding at around $456.13 per kilogram. Praseodymium oxide traded sideways last month, staying around $86,339 per metric ton.

Don’t forget to read Sept 2014 MMI analysis before October’s full report comes out next week!

The Rare Earths MMI® collects and weights 14 global rare earth metal price points to provide a unique view into rare earth metal price trends over a 30-day period. For more information on the Rare Earths MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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