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China's move to slash export quotas on rare earth minerals raises fresh international trade...

China's move to slash export quotas on rare earth minerals raises fresh international trade concerns. Sony (SNE) vows to reduce its reliance, but for other firms, the Chinese action provides a boost: Molycorp (MCP +6.4%) shares continue their wild ride, and Lynas (LYSCF +15%) soars even though it won't be able to mine any material from a new lode in Australia for at least a year.
Comments (5)
  • youngman442002
    , contributor
    Comments (5131) | Send Message
     
    what China wants.... is you to move all your high tech manufacturing to them..so they can steal the technologies....
    29 Dec 2010, 02:39 PM Reply Like
  • Eamon Keane
    , contributor
    Comments (311) | Send Message
     
    Nearly all rare earth junior miners are up sharply today. Only a few will make it, so I'd say if you have a long enough time horizon and the moxy you could short the worst ones. Read some of Jon Hykawy's stuff here:

     

    www.byroncapitalmarket...
    29 Dec 2010, 02:40 PM Reply Like
  • Eamon Keane
    , contributor
    Comments (311) | Send Message
     
    A few comments on the Reuters story:

     

    "Wind turbines and hybrid cars are among the biggest users of rare earth minerals"
    Hybrid car sales this year were about a million. A million hybrids requires only about 0.25t of neodymium. Use of rare earths in wind turbines is only beginning, but suppose 1GW of turbines this year used neodymium, that's only 0.07t. Depends on whether you call 0.27% (0.3/110) "among the biggest users".
    Source: www.slideshare.net/Eam...

     

    "Demand is set to more than double to 250,000 tonnes by 2015, according to industry estimates."
    Of the four I looked at, the estimates were 160-200kt. If demand grows at the long run historical average, you're only looking at 140kt.
    Source: Figure 15 of www.slideshare.net/Eam...
    29 Dec 2010, 02:56 PM Reply Like
  • awyethh
    , contributor
    Comments (16) | Send Message
     
    ....also though, each hybrid vehicle uses about 15-20 lbs. of lanthanum......a typical vehicle uses between 5-10 lbs. of lanthanum.
    29 Dec 2010, 03:32 PM Reply Like
  • Eamon Keane
    , contributor
    Comments (311) | Send Message
     
    Good point. Here you have to make a judgement: (a) How many hybrid cars will be sold in 2015 and (b) Will future hybrid cars use NiMH batteries or Li-ion.

     

    If you believe strong hybrid demand and that Li-ion is not going to take off, then you can take Lynas' forecast from Figure 16 and there may be significant undersupply. The opposite view is by Jon Hykawy of Byron Capital Markets. The other two forecasts take a middle of the road and show a small surplus. How all this translates to market prices or how much of a security premium there will be is anyone's guess.
    29 Dec 2010, 03:38 PM Reply Like
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