new reo prices and basket price, page-45

Don, you wrote in part,
“i don't understand why you guys still hold up this basket fairytale. prices on lyc website are not only way too high, they're also misleading because the hree elements can't be seperated at the lamp. still trying to find out the external costs of seperation.”.
Rather than follow the herd (in this case the press), have a think about the longer term. Yes China manufactures and controls more than 90% of the world RE supply at the moment and inflated the prices of RE baskets in 2010 when they introduced RE quotas. This saw a boom market for any business who added RE to their bow.
Then the GFC saw the use of RE decline as business slowed down purchases and manufacturing in general. This saw the RE basket price fall along with virtually every other metal and commodity on the market. Lynas and Moly who are the nearest to producing and selling RE saw more than half their share value removed during this period. Other explorers etc. lost even more value and China only shipped around 65% of the previous years export quota from the previous year.
Granted, HREE prices are more attractive than LREE and look to remain the case for the foreseeable future.
A major differentiator for Lynas and Moly is their downstream processing. As you would be aware DC, a major cost of production is RE processing so any RE hopeful must have a solution in place before they should even be considered a RE player so I am going to discount pretty much all other RE plays except LYC (needs the LAMP), MLY (up 19% the day they bought NEO for their processing capability) and China in general terms. We will see a bit more M&A activity as RE plays come look to tick the processing box imo.
I would not like to see Lynas reliant on LREE income for their future however am confident they have a work able HREE plan in place. Niobium may be a big target in the near future.
So, RE basket pricing Don C?
Chinese ore is very low grade and the deposits are not high in volume and spread across a very large geographical area. China has a firm hold on the market at the moment but it can’t sustain that (ergo them looking to buy RE plays). Their own press statements indicate that their reserves will not be enough to meet demand.
My belief is that RE is pretty close to a bottom at the moment. RE had a large slide due to outside influences such as GFC, macroeconomic downturn, investors seeking safe havens jumped out of the resource sector and got into Gold, treasury bonds and cash.
A shortage of HREE is imminent due to Chinese restrictions (USGS estimate of global rare earth oxide (REO) reserves (2011) stated China of approx. 55 million tons. Chinese reports now say they will deplete their reserves of HREE rapidly due to an exponential rise in demand. This is why China is giving away technology and expertise. RE is not rare as everyone is tired of hearing, what is rare is the ability to process and produce which is why the RE basket price will go back up as demand increases.

The world is so reliant on China that the price can rise and fall dramatically on what they do which is another reason why LYC and MLY can lock in higher prices. Business will pay a premium for a guaranteed supply of quality REO.

I am confident that RE prices will bounce.