It says a lot about the state of the rare earth industry that the third largest company outside of China - and owner of one of the most important projects for so-called heavy rare earths - is valued at less than 100 million dollars.
It is the Australian Northern Minerals (WKN A0LBN5), who recently presented a definitive feasibility study on their Browns project in Western Australia. This valuation reflects the decline in investor confidence in the sector since the bubble of rare earth prices in 2011 year. However, it looks like the sheet could turn slowly. As it seems, the demand for the not so rare metals is slowly picking up again, after they came to a standstill because of the absurdly high prices 2011 and 2012.
The market is still relatively opaque, but there are reports that the price of some heavy rare earth metals - has always been the most valuable - has risen. Thus, the terbium price has risen by nearly 50% and the dysprosium price by more than 20% since November. Also in Europe, prices had recently increased, it said.
And, as it also seems, China has started to dump rare earths, especially heavy rare earths. And despite the problems with the World Trade Organization, Beijing is apparently still able to regulate what quantities are being exported.
For more than a decade, the West has been trying to reduce its almost complete dependence on China. But Beijing is still dominating and many players outside the People's Republic have established close ties with partners from there. Although these companies are able to conclude their own supply agreements, there is little doubt that they operate within the context of the Chinese rare earth sector and China wants to remain the dominant player. Even the biggest producer outside of China Molycorp (WKN A1C2G7) has only a market capitalization of about 208 million USD and in second place is the Australian Lynas Corp. (WKN 871899) with just 175 million dollar stock market valuation.
But despite all the problems and the decline in interest in the rare earth sector, some companies are making important progress, for example Greenland Minerals & Energy (WKN A0JM17) belongs. The company is about to complete a feasibility study on its rare earth and uranium project Kvanefjeld in Greenland.
However, the Canadian is also making good progress Commerce Resources (WKN A0J2Q3) with their Eldor project or the Ashram deposit. In contrast to the competition, Commerce is working on the production of a simpler and less expensive concentrate that could then be processed in other plants. Commerce has now commissioned a small pilot plant and plans to produce a first sample this year, which can then be used to tackle the operators of external separation plants.
Should Rare Earth prices actually continue their recovery, this could indicate that the sector has reached a more sustainable level. And then sooner or later the stock market valuation of companies in the sector could rise to another level.
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Source: http://www.miningscout.de/kolumnen/2015/03/11/trotz-aller-probleme-seltene-erden-startet-eine-erammlung/
