Jacob Securities Comments on Best Plays for Rare Earth Demand
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Jacob Securities Inc. notes that rare earths demand is increasing in some of the highest growth sectors around the world. China, who is the dominant global supplier, cut its supply commenting that domestic needs and environmental concerns were the cause.
Compared to the first half of 2011, China has cut its rare earth exports by 35 percent while import numbers from Japan and other countries highlight that China’s export quotas are not being adhered to and are instead much higher than what was set by the Chinese authorities. The firm believes that China will not change its export policies anytime soon.
While international rare earth prices have increased by more than 100% this year; the firm predicts that prices will fall when the first rare earth miners outside of China begin production. Jacob Securities anticipates that prices will fall more than 80 percent in the next five years on lanthanum and cerium as they have risen much more compared to the critical materials. It also forecasts that the dysprosium real price will to continue to increase and stay above current prices in the long term.
Jacob Securities comments that the first company with rare earth properties in the United States, such as Ucore and Rare Element Resources, will have a large amount of government interest and support.
Lynas (OTCBB: LYSCF) and Molycorp (NYSE: MCP) both have the potential to start producing before 2013. The firm believes the other front runners are Rare Element Resources (NYSE: REE), Ucore (OTCBB: UURAF), Matamec (OTCBB: MTCEF), Avalon (NYSE: AVL) and Frontier (OTCBB: FREFF).
The firm notes that it is import for companies to secure off-take agreements and partners to develop refinery facilities to produce the often highly sophisticated rare earth elements metal alloys and products, and that companies which start production past 2016 may miss out on the strongest agreements and partners.
Compared to the first half of 2011, China has cut its rare earth exports by 35 percent while import numbers from Japan and other countries highlight that China’s export quotas are not being adhered to and are instead much higher than what was set by the Chinese authorities. The firm believes that China will not change its export policies anytime soon.
While international rare earth prices have increased by more than 100% this year; the firm predicts that prices will fall when the first rare earth miners outside of China begin production. Jacob Securities anticipates that prices will fall more than 80 percent in the next five years on lanthanum and cerium as they have risen much more compared to the critical materials. It also forecasts that the dysprosium real price will to continue to increase and stay above current prices in the long term.
Jacob Securities comments that the first company with rare earth properties in the United States, such as Ucore and Rare Element Resources, will have a large amount of government interest and support.
Lynas (OTCBB: LYSCF) and Molycorp (NYSE: MCP) both have the potential to start producing before 2013. The firm believes the other front runners are Rare Element Resources (NYSE: REE), Ucore (OTCBB: UURAF), Matamec (OTCBB: MTCEF), Avalon (NYSE: AVL) and Frontier (OTCBB: FREFF).
The firm notes that it is import for companies to secure off-take agreements and partners to develop refinery facilities to produce the often highly sophisticated rare earth elements metal alloys and products, and that companies which start production past 2016 may miss out on the strongest agreements and partners.
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