Rare Earth Prices Expected to See Drastic Fall Through 2012
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Rare earth prices may continue to fall from record highs in 2011 as at least two major multinationals may scale-back use of the minerals.
According to Boomberg Thursday, Toyota (NYSE: TM) and General Electric (NYSE: GE) may cut using rare earth minerals in items like automobiles and wind turbines. The duo, amongst others, vowed to ebb use after China said it would cut exports and impose tighter controls on the industry last year.
Cerium and lanthanum, two of the most abundant rare earths, will see prices drop by 50 percent over the next 12 months, according to one analyst from Hallgarten & Co. Other minerals like neodymium and praseodymium may fall as much as 15 percent over the same period, he continued.
Automakers, which are primary rare earth customers, use mainly rare earth permanent magnets. With prices continuing to increase, it begins to make sense for automakers to spend more on R&D to engineer what may become an alternative to the minerals.
Instead of using neodymium and lanthanum in vehicles, for example, Toyota has switched to using an induction motor. General Motors (NYSE: GM) also plans to sell its Chevy Malibu Eco next year with an induction motor.
General Electric has said it will begin shifting away from the minerals as well, which will also be a big impact to the industry. Bloomberg notes some GE offshore wind turbines uses as much as a half ton of the minerals.
Increased production, with new mines in California and Australia expected to come online in 2014, will add to market saturation, causing a further decline in prices.
Bloomberg notes the Rare Earth Mineral Resources index fell 41 percent over the last three months as speculators continue to exit positions.
Investors might want to keep Molycorp (NYSE: MCP), Quest Rare Minerals Ltd Common (AMEX: QRM), Avalon Rare Metals, Inc. (AMEX: AVL), and Rare Element Resources Ltd. (AMEX: REE) in their sights moving forward.
According to Boomberg Thursday, Toyota (NYSE: TM) and General Electric (NYSE: GE) may cut using rare earth minerals in items like automobiles and wind turbines. The duo, amongst others, vowed to ebb use after China said it would cut exports and impose tighter controls on the industry last year.
Cerium and lanthanum, two of the most abundant rare earths, will see prices drop by 50 percent over the next 12 months, according to one analyst from Hallgarten & Co. Other minerals like neodymium and praseodymium may fall as much as 15 percent over the same period, he continued.
Automakers, which are primary rare earth customers, use mainly rare earth permanent magnets. With prices continuing to increase, it begins to make sense for automakers to spend more on R&D to engineer what may become an alternative to the minerals.
Instead of using neodymium and lanthanum in vehicles, for example, Toyota has switched to using an induction motor. General Motors (NYSE: GM) also plans to sell its Chevy Malibu Eco next year with an induction motor.
General Electric has said it will begin shifting away from the minerals as well, which will also be a big impact to the industry. Bloomberg notes some GE offshore wind turbines uses as much as a half ton of the minerals.
Increased production, with new mines in California and Australia expected to come online in 2014, will add to market saturation, causing a further decline in prices.
Bloomberg notes the Rare Earth Mineral Resources index fell 41 percent over the last three months as speculators continue to exit positions.
Investors might want to keep Molycorp (NYSE: MCP), Quest Rare Minerals Ltd Common (AMEX: QRM), Avalon Rare Metals, Inc. (AMEX: AVL), and Rare Element Resources Ltd. (AMEX: REE) in their sights moving forward.
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