The various and extensive use of permanent magnets in
electronic gadgets, radars, hybrid cars, energy efficient solar
panels and wind turbines will continuously push the demand and
price for rare earths in 2012.
This is the assessment of U.S. based rare earths producer
) CEO Mike Smith in a dialogue with company shareholders led by
Baron Capital chairman and CEO Ron Baron.
"We're talking double-digit compounded annual growth rates for
the foreseeable future. Nobody knows when that's going to stop so
that's a huge growth market for us. Those magnets are going to be
used in hybrid and electric cars.
"They're already used in today's cars. When you look at the
wind power business, the wind turbines that are being converted
are using permanent magnet generators so they can be more
efficient and reliable than the old inductive coil gear-box type
systems. So those are the huge, huge growth areas but as long as
you and I need gasoline we still have to have rare earths," Smith
said during the event aired over CNBC.
Smith noted that the current supply constraints, with about
95% of world's supply generated by China, there is now pressure
on prices of non-Chinese suppliers.
Molycorp had not seen any fluctuations in the demand volumes
in spite the relative slowdown in the global economy. Thus, some
Molycorp customers are willing to pay a premium for a steady
supply assuring them of better margins.
"There probably are some global economic issues but I think
the order volume really indicates a supply and demand problem for
rare earths. There just aren't enough of these materials to meet
the demand and so everything we make we are selling. And with the
prices the way they are today even though we want to be very
cooperative with our customers and make sure they're competitive,
we're actually making the highest margins in the history of the
company," Smith explained.
To be less reliant on China for rare earths, companies like
Molycorp, Lynas Corp., Alkane Resources, Globe Metals Mining,
among other mining firms have embarked on mineral exploration
projects to uncover more of the coveted rare earths in other
Recently, the U.S. Congress considered a strategic stock pile
of rare earths as they are used in a variety of applications
including global positioning and guidance and control systems,
according to a Congressional Research Service report.
(To contact the reporter and editor on this story:
China's Attempt to Control Rare Earths Causes
Prices to Drop 133%