all rare earth companies are different but they've all experienced the big dipper
Arafura’s Nolans rare earths project.
Neodymium and praseodymium (NdPr) are two of the world’s most sought-after rare earth elements,Regina Meani writes.
As an independent product NdPr can be used for permanent magnet materials as well as a non-ferrous metal alloy additive.
The neodymium magnet made from praseodymium alloy is one of the most powerful and widely used rare earth magnets. The magnets are three times stronger, and one-tenth the size of conventional magnets.
The products gained from the NdPr mix are a crucial part of our renewable energy future. Every electric vehicle (EV) drivetrain requires up to 2kg of NdPr oxide, whereas a three-megawatt (MW) direct drive wind turbine uses 600kg.
NdPr is used in air-conditioning units and to create strong metals for use in aircraft engines. Praseodymium is a component of a special type of glass, used to make visors to protect welders and glassmakers.
Neodymium is used to create strong magnets in small volumes for smartphones and microphones and is an essential ingredient in the ever-growing high-tech industry.
These metals are geopolitically critical, as currently China produces 85 per cent of the world’s NdPr output. Global supply chains under duress from the COVID-19 pandemic have been further strained by the Russia–Ukraine war and achieving secure access to raw commodities and magnets has never been more important.
From their low points in June 2020, the prices for neodymium and praseodymium increased fourfold until they peaked together in February this year. Prices dipped into April losing around 18.5 per cent before rallying some 6 per cent.
At this stage, it’s difficult to determine whether the prices have corrected enough of the 2020–2022 upswing and there may be more price volatility and potential weakness as the prices rebalance. The upward trend is expected to resume further down the track.
There are several local companies mining for rare earths. Arafura Resources looks set tobecome a major Australian playerwith its Nolans project in Northern Territory.
The project not only includes the mine but a processing plant comprising beneficiation, extraction and separation plants. The on-site mineral resources have the potential to supply a significant proportion of global NdPr demand.
Between 2006–12, Arafura’s price experienced pronounced swings from around $0.19 up to the peak price around $1.95 in 2007. It wasn’t until late-2012 that the price broke down from this range and fell to a low point of $0.03 in 2014.
From here the price recovered forming a base through until January 2021 when the stock surged higher in line with the NdPr prices.
Most recently and again in line with the NdPr prices, the price has halted and pulled back. This action may continue to influence the price with support located in the $0.19–0.24 range.
Oscillations may develop in the $0.24–0.34 zone ahead of a resumption of the upward path through $0.35 for a test of higher barriers in the $0.45–0.55 area. Beyond this the stock has the potential to rise towards $0.75-0.80 and possibly higher.
Arafura’s stock has the potential to rise towards $0.75-0.80 and possibly higher.
One of the smaller rare earths players isAustralian Rare Earths, which is focused on developing its Koppamurra project.
Koppamurra contains significant quantities of NdPr, often referred to as light rare earths, as well as terbium and dysprosium, known as heavy rare earths. These four elements combine to make up the majority of global demand.
Terbium and dysprosium are added to NdPr to retain their magnetic properties at elevated temperatures.
Listing on the ASX in July 2021, the price for Australian Rare Earths rose quickly in its first few months. Starting from a low of $0.40, the price peaked at $1.35 in mid-August 2021.
Overbought conditions saw the price stall, pullback and oscillate on a downward slope even though rare earths prices continued to gain ground.
Following the rare earths peak and subsequent decline in February this year, Australian Rare Earths’ price began a steeper sell-off falling to a new low, which became a pivotal turning point, at $0.30 on June 14, 2022.
A reversal phase has developed but the price needs to break its downward trend through $0.50 for the potential to head towards $0.60–0.65 and possibly beyond its peak zone in the $1.20–1.35 range.
Lynas Rare Earths has one of the world’s largest single rare earths processing plants in Malaysia. The company’s Mt Weld mine in Western Australia boasts deposits of neodymium, praseodymium, lanthanum, cerium and mixed heavy rare earths.
The rare earth oxides are mined and initially processed at the Mt Weld concentration plant before being shipped to Gebeng, Malaysia, where the concentrate is separated and processed into high-quality rare earth materials.
Lynas’ growth strategy aims to expand the company’s industrial footprint with a planned rare earths processing facility in Kalgoorlie.
Lynas’ recent price momentum exhibits similarities to the 2018–19 oscillation phase.
Lynas’ share price formed a strong base from early 2014 until mid-2017 which propelled the price to initially reach resistance in the $2.90-3.10 range in 2018 and 2019. The price oscillated down to support at $1.75 with a market related plunge to $1.00 in March 2020.
From here, the price rose strongly in line with rare earths’ prices, powering through previous resistance to achieve the next barrier zone in the $11.50-12.50 area.
The ensuing pause coincided with a correction in the rare earths price. In the Lynas chart above-left, the momentum exhibits similarities to the 2018–2019 oscillation phase and suggests the price may continue to swing between $8.00–10.00 with the possibility that wider swings may develop before the phase is completed.
It is important to note that the price swings need not be as deep or for the same length of time as experienced in 2018–2020. Once the upswing has resumed, the price may head towards and retackle the peak area between $23.00–26.00 and potentially beyond.
This feature appeared in theAugust issue of Australian Resources & Investment.
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