Search

Core Consultants released its March 2019 Monthly Rare Earth Report. Major themes in this issue include:

Customs restricts imports of Myanmar rare earths

Since China began clamping down on illegal material, imports from Myanmar began to increase. The Tengchong Customs has finally managed to restrict imports of Myanmar material, which is already creating shortages in key markets. We have seen increases in heavy rare earth prices including dysprosium, terbium and gadolinium. We expect further price support to ionic clays as restrictions intensify.

Abundance of light rare earths impacts Pr/Nd prices

The light rare earth market is still suffering from a supply overhang. Additionally, weaker-than-expected magnet demand means that factories are able to hold off on PrNd purchases. These two scenarios are driving prices down further.  In the long-run, the higher price for heavier constituents would likely be offset by the lower cost of the lighter elements, but nonetheless, medium-term shortages of heavy rare-earths are possible, with the potential to result in high substitution pressure in 2H19.

We note a number of recycling projects in various stages of development worldwide intend to produce concentrates in a more environmentally friendly and cost-effective manner than mining. One U.S. company is already shipping waste sands for Rare Earth separation. China became a net importer of rare-earth products in 2018, and now another sizeable portion of raw material supply will need to be sourced for import.

Uncertain future for key rare earth supplier

Lynas’ future has once again been called into question. The company issued comment suggesting that it may be unable to meet the government timeline on the export of its Water Leached Purification (WLP) residue  back to Australia. Auditors Ernst & Young drew attention to the note in a review report, saying: “These conditions indicate the existence of a material uncertainty that may cast significant doubt about the consolidated entity’s ability to continue as a going concern.”

Given that Lynas is the most significant non-Chinese rare earth supplier, with core clients in China, Japan, Europe and USA, concerns over the return of a Chinese monopoly have been reignited, although we caution that a large number of new primary mines and recycling projects are in development, and we expect a more diverse raw material supply flowing into China in the long-run.

End user demand from wind power expected to expand in 2019

Global planned wind-power is poised for massive expansion in 2019. One  Chinese company is intending to construct 20,000 new installations totaling 500GW, and Siemens Gemesa taking on the construction, development and maintenance of over 447 turbines for the United States, Brazil, India and other five countries.

Intense demand this year would add significant support to raw materials pricing, but with dysprosium and terbium comprising a small portion of each NdFeB magnet, substitution pressure will be higher, although we expect this to continue to be limited to inland projects that can utilise less efficacious technologies owing to lower wind speeds. Thanks to their compactness, efficiency and low maintenance costs, RE-containing PMSGs still present a compelling argument offshore.

To inquire about a Core rare earth subscription for your company, please leave your details and our consultants will call you to assist. 

author avatar
Lara Smith
Lara is the CEO and founder of Core Consultants. She has been an analyst for over thirteen years and has focused on commodity markets for just over a decade. She began her career as a buy-side analyst at Foord Asset Management in Cape Town, before taking a Head of Research role at a mining corporate finance and investment firm.
window.lintrk('track', { conversion_id: 15930977 });

Leave your details and we will get back to you.