Tag: neodymium price

Rare Earths MMI® Falls 10%, New Demand Not Materializing

The monthly Rare Earths MMI® registered a value of 18 in September, a decrease of 10% from 20 in August.

Rare-Earths_Chart_September-2015_FNLThe story in magnets, batteries and other high-tech uses that rare earths are needed for has been one of slow and steady decline and while this new all-time low is steeper than many others we’ve tracked… it’s not unexpected.

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The battered rare earths market is receiving no support from the bearish market commodities market, overall, and, as we have documented before, substitution of light rare earths has been going on for years and further eroding demand.

This month, the only US-based rare earths producer, Molycorp, Inc., suspended production at its Mountain Pass mine in California and will now source its elements only from Estonia and China. This was another expected move as Molycorp entered chapter 11 bankruptcy protection earlier this summer and was looking to cut costs.

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The rare earths market has been oversupplied ever since China removed export quotas on its producers, the bulk of the industry, and it’s difficult to predict a price turnaround without major shutdowns overseas or a shift in the muted demand picture.

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Bottom Falls Out of Rare Earths MMI® as China’s Fanya Metal Exchange Freezes Deposits

The monthly Rare Earths MMI® registered a value of 20 in August, a decrease of 16.7% from 24 in July, the latest in a long list of all-time lows.

Rare Earths MMI, August

Of course, falling rare earths prices have been the rule, not the exception since 2011.

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Substitution and weak demand are the biggest culprits but China’s stock market crash has had a particularly profound effect on rare earths which have been used for much more than industrial consumption there.

Chinese Rare Earths Exchange Freezes Deposits

Investors in the financial products sold by the Fanya Metal Exchange demanded their money back in July as the exchange simply stopped disbursing funds last month to depositors. About $6.4 billion in investments is frozen, according to estimates by Chinese media.

Fanya is a forum for trading rare earths and other minor metals such as bismuth that has also functioned as a shadow banking institution — not only leveraging metal deposited with the exchange as collateral for loans, but offering high interest investment products to retail investors.

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The online report of a November 2014 meeting by the Yunnan provincial government on “tidying and reorganization” of local exchanges included a warning by the head of the Yunnan branch of the China Securities Regulatory Commission that “risk at the Fanya Metal Exchange was noted as very large.”

Fanya owes investors the equivalent of $6.4 billion and said in July that it plans to pay them off by buying back some metals on a regular basis.

Overall Weakness

The collapse of the exchange is the latest example of a weakening rare earths market. Earlier, the only US-based rare earths miner, Molycorp, Inc. filed for chapter 11 bankruptcy protection. It is difficult to predict a rare earths price turnaround this year.

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.

Rare Earths MMI® Falls Again as Molycorp, Inc. Seeks Bankruptcy Protection

Substitution continues to plague the rare earths market as our high-tech metals index fell from its already low, entrenched lull.

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Many manufacturers have found non-rare earth elements to use in battery, magnet and other applications or found a way to reuse and extend the life of the rare earths they already buy.

Rare-Earths_Chart_July-2015_FNL

Rare Earths Light

Lanthanum, dysprosium, cerium oxide and europium oxide have all steadily fallen in price since 2011. These lighter rare earths were certainly helped down the slope by China ending its export quotas for rare earths but, honestly, the slide happened way before that thanks to substitution and reuse.

Cerium, for instance, is used to polish glass and silicon wafers commonly used in photovoltaic solar panels. Solar manufacturers have found ways to collect it and reuse it. Simple reuse has cut demand for cerium by 70%. This has been happening since roughly 2012 and cerium’s price has fallen in lockstep as purchasers stretched their cerium further.

The monthly Rare Earths MMI® registered a value of 24 in July, a decrease of 7.7% from 26 in June and close to its all-time low of 23 last year. Yes, our lowest index fell nearly 8%.

Molycorp Files Chapter 11

This substitution problem is the bane of the only US-based rare earths miner, Molycorp, Inc., whose business is based almost entirely on light rare earths. The heavy rare earths, such as yttria, are scarcer and have more specific uses. It came as no surprise, then, to regular MetalMiner readers that Molycorp filed for chapter 11 bankruptcy protection this month.

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Molycorp has secured interim financing and is still operating, paying employees and selling product to clients such as Siemens AG for its wind turbines, but, long-term, it will need to sell products that can’t be as easily substituted or reused if it is to survive.

Actual Rare Earths Prices, Light and Heavy

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Rare Earths MMI®: Why the Molycorp, Inc. Bankruptcy Was Inevitable

Yesterday, the only US-based rare earths miner — Greenwood, Colo.-based Molycorp, Inc. — filed for chapter 11 bankruptcy protection as part of a reorganization of the company’s debt.

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This has been expected since Molycorp missed a debt payment early this month. In a statement, Molycorp President and CEO Geoff Bedford said, “The actions we have taken today are important steps toward achieving a restructuring of our $1.7 billion debt with our major creditor constituencies. In doing so, the company expects to exit Chapter 11 with an appropriate financing framework to support our business going forward.”

Rare-Earths_Chart_June-2015_FNL

We have documented the long stock price slide Molycorp has experienced and how many manufacturers have simply found substitutions for the light rare earths they offer. As with any bankruptcy, Molycorp’s shares will be removed from the New York Stock Exchange and move to the OTC pink sheets.

While it’s difficult to say if Molycorp will be able to emerge as quickly as Bedford’s prediction, it will take recovery in the overall rare earths market for it to succeed. Our MetalMiner Indx has documented a steady slide in rare earths prices over the last two years.

What This Means for Rare Earths Buyers

China eliminating quotas and opening its rare earth products up to foreign markets is depressing prices overall. Right now rare earths are in surplus and less production or greater demand will be necessary to bring prices back to 2011 levels.

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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. 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.

As Molycorp Inc Bankruptcy Looms, Rare Earths Price Index Falls

The big news in rare earths this week and month was that Molycorp Inc., the sole US-based RE miner and processor, missed a $32.5 million loan payment on Monday, triggering a 30-day grace period that will likely end with either a Molycorp debt restructuring or an outright bankruptcy.

Molycorp released a statement that read, “[the company] has elected to take advantage of the 30-day grace period with respect to the $32.5 million semi-annual interest payment due June 1, 2015 on its 10% senior secured notes due 2020, as provided for in the indenture governing the notes. This election by the company will not trigger any cross-default provisions in other outstanding company debt prior to the end of the grace period and should not affect current operations. As previously disclosed, the company has retained financial and legal advisors to assist the company to restructure its debt.”

Meanwhile, MetalMiner’s monthly Rare Earths MMI® registered a value of 26 in June, a decrease of 3.7% from 27 in May.

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Already weak prices have fallen further this month as Chinese REs, now free of export taxes, are flooding foreign markets. So what’s the relationship between Molycorp and RE prices?

Molycorp’s major concentration in the light RE market – the metals that customers have been finding substitutions for over the last three years, causing prices to fall – likely had as much to do with its missed payment as the structure of the company’s outstanding debt.

“Bankruptcy for Molycorp is definitely a possibility, but I think at least as many people think it’s more likely to come in the form of restructuring and a temporary shutdown rather than a clean sweep,” said Zachary Schumacher, market research analyst, tech metals & rare earth elements with Asian Metal, Ltd. “As for customers, I think there’s a few timeframes to look at it. In the short term, I think the effect will be mostly small. Molycorp’s play is heavily in the lanthanum and cerium markets with some noticeable market shares in NdFeB and some heavies. At the moment, with the current resource tax changes in effect in China, prices have if anything softened when compared with the prior export tariff system, so pricing is quite affordable.”

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That affordability of light REs has been readily apparent in our MetalMiner IndX ever since we started tracking RE prices in 2012. This is why we were skeptical when 60 Minutes and other national media seemed to discover Chinese dominance of the RE market and Molycorp’s Mountain Pass, Calif., mine briefly became a bit of a cause célébre in Washington a few months ago.

That’s not to say that conceding rare earth production to other nations would not be bad for national security, as the elements have many defense industry uses as magnets, batteries and other high-tech applications.

“Consumers still want a non-Chinese producer in the market,” Schumacher said. “Consumers are definitely wary about the type of price spikes that were seen in 2010-2011. While smuggled material is definitely a significant part of the market, and goes a long way in undercutting any potential oligopoly that either exists or could exist, I think consumers want to feel there’s a profitable non-Chinese producer in the sphere. What they’re willing to do for that still is apparently limited. Outside of a few notable/key joint-venture agreements or off-take agreements, they’re mostly just hoping a current in-development mine comes online in the near future to fill the need.”

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Rare Earths MMI®: Can a Clean Earths Supply Chain Save Molycorp?

Rare earth prices are falling because the metals used in magnets, batteries and electronics are not so, well, rare, these days. That availability has come with a major environmental price.

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China has lost control of its smaller, unauthorized rare-earth producers and, without export quotas, those metals are finding their way to foreign markets.

In addition to upsetting markets, most of unauthorized producers also have minimal environmental controls and even government-approved factories dump acid-rich, radioactive waste water into giant, leaky, unlined ponds which are threatening to pollute the Yellow River, a source of water for 150 million people.

Clean Earths

Molycorp, by contrast, has cleaned up its act and spent billions restoring its Mountain Pass, Calif., project, replacing its extraction systems and securing its mines.

Molycorp told Fortune it is building a rare earth supply chain that does not produce the kind of horrifying environmental damage other mines do. That means everything from using a process called chloralkali to use recycled water to separate the ore-less bad than chemicals, apparently-to generating power on-site.

The company is also using a new process to seal and bury its toxic tailings. Before reopening Mountain Pass, Molycorp used to dump its tailings in a slurry behind a dam. Now it uses a high-pressure system to squeeze out most of the water, leaving behind a “paste” that will be reburied in what’s essentially a 90-acre landfill just west of the pit mine.

Molycorp was recently selected as a 10-year provider of rare earths to Siemens AG for its wind turbine business and both companies touted its clean supply chain as a reason behind the move. If Molycorp, and other US-based rare earths miners, want to compete with the glut of Chinese products the way they will have to distinguish themselves is through supply chain accountability.

Molycorp Reports Another Quarterly Loss As Rare Earths’ Dead Cat Bounce Ends

The monthly rare earths MMI® registered a value of 27 in May, a decrease of 6.9% from 29 in April.

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The jump that much of the market felt after being featured on “60 Minutes” was gone this month and Molycorp reported another net loss for Q1.

Molycorp Needs More Funding

Molycorp reported higher production volumes in the first quarter of 2015 at its Mountain Pass, Calif., rare earth facility of 1,479 metric tons of rare earth oxide equivalent. This was an 11% increase over the Q4 2014 production of 1,328 mt.

Molycorp reported Q1 2015 product sales volume of 3,436 mt on a consolidated basis, a 9% increase over the Q4 2014. Net revenues for the quarter were $106 million, an 8% decrease from the Q4 2014.

The Greenwood, Colo.-based rare earth miner reported a net loss of $0.42 per share and a reported a net loss of $0.28 per share for the quarter on an adjusted non-GAAP basis, which compares to an adjusted non-GAAP loss of $0.39 in the Q4 2014.

Molycorp was selected by Siemens AG to supply rare earths over the next 10 years for high-power, sintered rare earth permanent magnets used in Siemens’ wind turbine generators, but it’s unlikely that the proceeds from that deal will help its financial position this year. Molycorp reiterated that it would need more financing to continue operations.

Persistent Low Prices

The problem for Molycorp is much the same as that for the entire rare earths industry: low prices. China ending export quotas on the elements has not yet resulted in higher prices and companies such as Molycorp, Texas Rare Earth Resources and Australia’s Lynas Corp. are feeling the pinch as a result. Many high-tech buyers of the magnets and oxides in the rare earths ground have moved on to other sources.

The Rare Earths Resurgence: Hope or Hype?

Rare earths got a spotlight this that’s more often reserved for steel, renewables and other more flashy metals courtesy of CBS News’ “60 Minutes.

Response has been mostly positive and the monthly Rare Earths MMI® registered a value of 29 in April, an increase of 3.6% from 28 in March. More importantly, shares of the only US-based Rare Earths producer, Colo.-based Molycorp, shot up as soon as the report aired.

Hype vs. Hope

Is this a sustainable trend? The trace metals that make up the rare earths group are not any more abundant or in demand than they were a few weeks and we’re still not clear on exactly what China lifting its rare earth export quota system actually even means.

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Why all of the concern, all of a sudden, for yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium? We have documented, several times, that despite China’s market dominance there is not yet a shortage of the elements that are used in everything from cell phones to fighter jets.

My colleague, Lisa Reisman, rightfully pointed out this month that, “the underlying supply and demand fundamentals create absolutely no business case for the private sector to behave any differently. As long as heavy rare earths continue to flow from China (we are talking about the following metals: yttrium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and tuteium and some might add europium and gadolinium) at a ‘not break the bank’ price, the private sector remains content with the status quo.”

Rare Earths MMI®: Molycorp Misses Estimates, May Be Delisted

Rare Earths MMI®: Molycorp Misses Estimates, May Be Delisted

After the markets closed Monday, Molycorp Inc. reported its fourth-quarter financial results. The rare earths company had a net loss of $0.39 per share on $116.2 million in revenue for the fourth quarter. That compared to Thomson Reuters consensus estimates of a net loss of $0.26 per share on $104 million in revenue. Molycorp missing estimates may result in delisting by the New York Stock Exchange.

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The company did, however, report higher production volumes in the fourth quarter of 2014 at its Mountain Pass, Calif., rare earth facility, with 1,328 metric tons of rare earth oxide equivalent production. That compares to 1,034 mt in the fourth quarter of 2013 and 691 mt in the third quarter of 2014. Full year 2014 production at Mountain Pass totaled approximately 4,769 mt, compared to 3,473 mt in 2013.

Molycorp reported consolidated net revenues of $475.6 million, a 14% decrease as compared to the full year 2013. The decrease in revenues was largely driven by softened rare earth pricing.

Per-unit cash production costs at Mountain Pass declined in the fourth quarter of 2014 to $21.02 per kilogram, a 38% decrease over third quarter 2014 costs of $33.80 per kilogram.

The results paint a grim picture for Molycorp, including the perspective that the company may not be able to make the $1 per share mark and will have to face delisting by New York Stock Exchange, according to Reuters.

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As Molycorp, Lynas Corp Stock Rises, RE Price Index Jumps 7%, Showing New Life

Showing life that hasn’t been seen since last July, the Rare Earths MMI® jumped in March to a value of 28, an increase of 7.7% over its 26 score in February. The flat-to-down market has risen five points from 23 in the last 3 months.

China opening the floodgates by ending rare earth export quotas has allowed end-users to purchase more computers, industrial magnets, cellular phones and other rare earths-powered products. China controls 90% of the not-so-rare elements, but the rally seems to be based on more than just China. There are new mines meeting demand capacity in India and a healthy Australian rare earths industry contributing, as well.

Here in the US, Molycorp stock surged in price in February, although it’s still hovering around a dollar per share. The struggling RE miner seems to have at least shelved restructuring talks that started earlier this year. The company has doubled production at its Mountain Pass, Calif., facility, reporting that in Q4 2014 it completed 1,328 metric tons of rare earth oxide equivalent production. That compares to 1,034 mt in Q4 of 2013 and 691 mt in Q3 of 2014. Full year 2014 production totaled 4,785 mt, compared to 3,473 mt in 2013.

Lynas Corp. saw a similar stock price jump last month.

The end of China’s export quotas is, of course, still the biggest story with REs. Last month China outlawed the licensing process for new RE exporters and most agreed it was not a process that will exclude smaller miners. The markets reacted favorably to China’s Ministry of Commerce’s (MOFCOM) process and recent speeches about REs.

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