Underwater Rare Earths Deposits More Dream Than Reality (MCP, AVL, LYSCF, REE, REMX)
Shares of Molycorp (MCP), the largest U.S.-based rare earths miner, are down 2% as analysts speculate that the vast underwater deposits of rare earths recently discovered by Japanese scientists are not economically feasible to try to extract and that doing so could come with a heavy price tag and take decades. Japan, the second-largest rare earths consumer behind China, said that 80-100 billion tons of rare earths deposits lie 11,500-20,000 feet below sea level in the Pacific Ocean.
Investors are not responding kindly to the news as the Rare Earth Stocks Index is down 1.3%. Japan announced the discovery earlier this week and it was initially thought to be a way for the country to decrease its dependence on Chinese rare earths imports. China controls 95% of the global rare earths export market and has been steadily paring export quotas over the past year, leading to surging prices for the 17 elements used to make hybrid cars, laptops, smartphones and other high-tech gadgets.
In other rare earths news, shares of Avalon Rare Metals (AVL) are up 1% after the company said its prefeasibility study for the Nechalacho rare earths deposit in Canada showed a discounted cash flow analysis yielding a 39% internal rate of return, indicating the deposit is more economically viable than previously thought. The company added that it is using conservative assumptions for rare earths prices on the expectation that prices will decline from current levels as new supply comes to market.
Investors can track the Rare Earth Stocks Index for performance trends and a suite of other metrics at tickerspy.com.
More on this topic (What's this?)
Luisa Moreno: Brace Yourself for Three More Years of Heavy Rare Earth Shortages (Gold Stocks Today, 4/30/13)
Luisa Moreno: Brace Yourself for Three More Years of Heavy Rare Earth Shortages (Jutia Group, 4/30/13)
Keys to Rare Earth Companies’ Success: Innovation, Cost Efficiency (Jutia Group, 1/22/13)
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