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| Renaissance sees huge potential in rare earth metals |
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| Code:MFN002573 Prpduct:Cerium Date: 2010-07-15 |
Rising global demand coupled with limited supplies make rare earth metals, used in new technology, one of the top investments for the next decade, investment bank Renaissance Capital said on Wednesday.
Production of rare earths is concentrated in China, the world's top metals consumer, which accounts for 95 percent of global supply, and is trying to clamp down on exports of its mineral wealth.
Last month, the British Geological Survey, a supplier of geological information, told Reuters the world would not run out of rare earth metals because of abundant resources on all continents.
"This is a very interesting sector (where) prices aren't affected by big stock movements or currencies, like copper, aluminium and nickel are," Rob Edwards, managing director responsible for steel, metals and mining research at the Russian Renaissance Capital bank, told Reuters in an interview.
"It's strategic, so you are seeing a couple of drivers," Edwards said. "You are seeing supply pinching out from the traditional big suppliers, which are the Chinese operations. You are (also) seeing an increased intensity of use."
Rare earth metals have become important in recent years with the development of new technology. Lanthanum for example is used to make rechargeable batteries for hybrid cars and neodymium is used to make magnetic motors for hybrid cars and cameras.
Analysts say demand for rare earth metals is likely to increase by between 10 percent and 20 percent each year.
"It reminds me of a small version of the platinum group metals (PGMs) industry, where PGMs were a pretty mundane metal ... but then the world pushed very heavily for widespread use of catalytic convertors," London-based Edwards said.
CHINA'S DOMINANCE
"There aren't a lot of deposits out there. There are two or three development projects outside of China," Edwards said.
The process of turning rare earth minerals into refined products is most advanced in China, which is estimated to hold more than 35 percent of global reserves.
Seeking to secure supplies, China has already put limits on rare earth production and stopped issuing new exploration licences until June 30, 2011.
It also launched a crackdown on illegal rare earth mining last month to stamp out unauthorised supplies. Its leading producer has also been given permission to set up a strategic reserve in the northern region of Inner Mongolia.
But China has not had it all its way. Last September China Nonferrous Metal Mining (Group) Co. Ltd terminated a deal to take a majority stake in Australian rare earths miner Lynas Corp , citing stiff conditions imposed by Australia's Foreign Investment Review Board.
"Ensuring supplies is going to become a big issue," said Edwards, whose bank is focused on emerging markets of Russia, Ukraine, Kazakhstan and sub-Saharan Africa. "It's going to be over the next decade, it's going to be long and sustained."
Renaissance's top rare metal picks include Lynas Corp and Greenland Minerals and Energy. |
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| 06 Sep 2010 | | | Cash Ask | 3M Ask |
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| Copper | 7660.50 | 7675.00 |
| Aluminium | 2148.50 | 2179.00 |
| Zinc | 2146.00 | 2176.00 |
| Lead | 2160.00 | 2175.50 |
| Nickel | 21910.00 | 22000.00 |
| Tin | 21375.00 | 21400.00 |
| Al.Alloy | 2281.00 | 2170.00 |
| NASAAC | 2090.00 | 2120.00 |
| Steel Billet | 508.00 | 520.00 |
| Cobalt | 39501.00 | 41000.00 |
| Molybdenum | 35500.00 | 36000.00 |
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2010-09-06 |
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| PRODUCT |
BID
(US$/TON) |
ASK
(US$/TON) |
2B Coil-OCT |
3,300 |
3,380 |
No.1 Coil-OCT |
3,120 |
3,200 |
2B Coil-DEC |
3,300 |
3,380 |
No.1 Coil-DEC |
3,120 |
3,200 |
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MetalFirst China Average:
US$16.025/lb
As of Sept. 3, 2010
(updated weekly)
MetalFirst Average:
US$16.10/lb
As of Aug. 31, 2010
(updated twice weekly)
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