2010 Outlook: How Did We Do?
By Clint Cox
Below is my commentary on the market from our posting in January of 2010. Following each section I give my assessment (in italics) of how our outlook seems to be holding up with time…
Happy New Year!
This is more of an exercise in entertainment than it will be informative. There are so many different directions the rare earth industry could go this year that it would be foolish to make formal predictions (so please consider anything I say here very informal). Enough tip-toeing, let’s dance!
I had no idea how fast the music would play this year! My feet don’t move that fast!
I stated that this would be an issue last year, and I still believe that this can have a great deal of effect on the marketplace for rare earths. If we have a repeat credit crisis or a currency crisis of any sort, the REE business may be greatly affected. It is good to look at the broader economy as the backdrop for the REEs.
The overall economy recovered (somewhat), and the REEs did the same. The 2009 dip in the REE market now seems a distant memory…
China Export Quotas
I don’t think China will restrict export of any REEs, but I have been wrong many times before. The quotas may stay flat or go down a bit, but I think the fear of China cutting off the West is not going to happen right now.
Whoa! China didn’t cease export of any rare earth element, but the quotas plummeted in the second half of the year, and the fear of China cutting off the West has taken a firm grip. I botched this one!
April 1, 2010 Report
Congress will get its first formal look at the rare earths industry as they have ordered a report studying the REEs due on April Fools Day. I don’t know what the impact of this study will be (or if it will be public information). Depending on its content, and what is done with it, it may have substantial repercussions — at least in North America.
There have been substantial repercussions felt from various government reports that have been released. The CRS, USGS, and DOE have all released reports of impact. Legislation is underway, and it will be interesting to see where DC fits into the bigger REE puzzle.
Nonstop Rare Earth Conferences
The media attention placed on rare earths in 2009 sparked tremendous interest, and now there are a number of groups providing new, improved, or watered down ways to learn about REEs! There are some very legitimate conferences that have been around for some years, and there will be some worthwhile newcomers. However, there is a lot of talk about being “the” rare earth conference. Here is a partial list of currently scheduled conferences (more conferences will be scheduled throughout the year):
This list does not include conferences such as Indaba or the PDAC which will have dedicated rare earths talks or programs.
The above list represents just a trickle of rare earth conferences washing into the marketplace! Some are certainly much better than others, and the industry is getting weary, but it is also exciting and offers plenty of opportunity for the industry to get together face to face.
Last year’s MIIT draft out of China was the catalyst that captured the media’s attention. Since then, there has been substantial coverage of REEs in green technologies and other important applications. This is a true wildcard — I believe that the media coverage will continue, but I also believe that most stories will be ill-informed. There has been some excellent, responsible coverage, but I anticipate more sensational journalism grabbing headlines regarding the rare earths.
Shah-baaaaam! Media attention has truly exploded, and has become much more than a wildcard — it has become a main player. People are reading about rare earths all over the New York Times, Wall Street Journal, Bloomberg, the Economist, and the Financial Times! It has become front page news all over! And yes, many of the stories are ill-informed, but there are some excellent journalists out there trying to get the story right.
The Development of Sichuan
Most of the talk surrounding the LREE in China revolves around Bayan Obo and Baotou. However, the Jiangxi Copper Group has made it clear that they will be developing the Maoniuping deposit in Sichuan (also referred to sometimes as “Mianning”). Jiangxi Copper will be spending hundreds of millions of dollars to develop the site, and it is unclear what impact it will have on the market. This should be followed closely, as they have a substantial deposit of rare earths.
Not much has been said here. Jiangxi Copper is definitely a player here, and there will probably be some serious production, but there hasn’t been a lot of news directly regarding this.
When I began covering this industry there were only a handful of junior exploration companies that would claim that they had anything to do with rare earth. Now there are well over 100. There will be new projects coming to light in 2010, and we look forward to some surprises.
In March 2010 alone (mostly coinciding with the PDAC) we added over 50 projects to our database! Yikes! The number of new projects is staggering, but was predicted by those who know the junior exploration market much better than myself.
There may be several players coming into the public market in 2010 — some of these may be significant. Let’s watch and see if this pans out, and how much money they raise.
IPO Fever! A number of companies had IPOs, but the splashiest by far was Molycorp. They timed the market almost perfectly (going public around the time of the Chinese quota cut), and have risen steadily throughout 2010. Several others went public as well, with quite a few cued up for 2011.
Ah! Saved the best for last. There will be unknown events in 2010 that will undoubtedly rock the rare earth market. We will watch with eyes wide open, but we will certainly be surprised like everyone else!
Big quota reduction. Questions about exports. Media explosion. There were plenty of surprises!!!
More to come in early January with our Outlook 2011!