China’s stranglehold on the rare earth market has been a major problem for the US as the elements are crucial for the manufacturing of popular high-tech products. China currently mines more that 95 percent of the world’s rare earth supply, which allows them to manipulate price and availability to the US markets. Five Star Equities examines the outlook for companies in the Rare Earth Industry and provides equity research on Molycorp, Inc. MCP -0.30 percent and Rare Element Resources Ltd REE +1.14 percent CA:RES +2.03 percent.
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China’s monopoly of the rare earth market could be in jeopardy as countries have invested significant money and resources into domestic rare earth projects. Technology Metals Research states that there are currently 35 rare earth projects outside of China, with Molycorp’s Mountain Pass operation being the most mature. The Northeast Corridor of Canada is also home to several promising mines. According to a recent Forbes article it is possible that by 2020, 15-20 percent of the world’s rare earth could be mined outside of China.
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In 2011, Molycorp’s three facilities (Mountain Pass, Silmet, and Metals & Alloys) produced over 3,500 metric tonnes of rare earth products, as measured in rare earth oxide (REO) equivalent. In 2012, their projected production will be between 8,000 and 10,000 metric tonnes REO. Project Phoenix, the expansion and modernisation of their facilities at Mountain Pass, will transform the company’s capabilities and dramatically increase the amount of rare earth materials available to the rest of the world.
Rare Element Resources’ Bear Lodge Project has 100 percent interest in the Bear Lodge Property in Wyoming, USA, which contains one of the largest disseminated rare-earth element (REE) deposits in North America (US Geological Survey Professional Paper 1049D) as well as extensive gold occurrences. The Bear Lodge Project has high-grade light REE (LREE) and significant quantities of heavy REEs (HREEs), favourable metallurgy, outstanding infrastructure, and it is located in one of the world’s best mining jurisdictions, recently globally ranked fourth by the Fraser Institute.
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