Professor Dudley Kingsnorth’s bullish position on REE markets
“I watch the rare-earth market fairly closely… and I talk to both the end users and the producers. I think what’s happened is that people have underestimated the amount of REEs that China sold in 2010 and 2011; when we saw huge hikes in prices, which was accompanied by uncertainties of supply. As a result, the West built up huge stockpiles of rare earths that was probably equivalent to three or four year’s worth of consumption.
Over the last few years, we have seen what’s happened. China has really clamped down on the illegal mining and supply. And that’s really having an impact on the material that’s available coming out of China. China’s stockpiles have been run down. When people look at the present REE market situation, they say, ‘when I look at metal pages, the prices are coming down and the volumes don’t look that great.’
What happened was in 2010 and 2011, companies bought a lot of the illegal REE material that came out of China. They are now getting towards the end of that material. As a result, we are going to witness a big pick up in REE purchases toward the end of this year. We are going to see a recovery in prices in the fourth quarter, but more importantly, we are going to see a return to the volumes we saw a few years ago.
In spite of all that reduction of supply coming out of China, if we had the same reduction in the demand for hybrid vehicles, iPads and smartphones, we would have had millions of people laid off. That hasn’t happened. The growth and demand for those consumer items – which consume a lot of rare earths in their manufacturing – has remained unchanged. And that, to me, is fundamental to the fact that rare-earth consumption has remained very much the same the past few years. It hasn’t fallen. J.P. Morgan might have a different view, but my view is that the demand has remained very much the same and we are now in a situation that the stockpiles that were built up – because of panic – in 2010 and 2011 are being run down. We are about to witness a rebirth and rejuvenation in the REE space – specifically at the end of this year/beginning of 2014.”
The following .pdf file is Professor Dudley J. Kingsnorth’s Presentation to the AusIMM Critical Minerals Conference 2013. Professor Kingsnorth’s subtheme was that the Rare Earths Industry is Undergoing Rejuvenation. The start-ups underway at Mountain Pass and Mt. Weld are providing comfort to the end-users so that they are ceasing to seek alternatives to use rare earths; which should lead to growth in demand. It is worth noting that under the influence of the global financial crisis and the limitations on production and exports put in place by China, global rare-earths demand has remained static at approximately 120,000tpa REO over the past 6 years (2008 to 2013 included). With the rebirth, Professor Kingsnorth believes that we will see a return to a growth in demand of 8% to11% per annum over the coming years; resulting in total global demand of 160,000tpa REO in 2016 with a real prospect that demand will exceed 200,000tpa REO in 2020 for the first time. Nevertheless, the lack of any rest-of-wrold heavy rare earths producers remains a real concern to consumers, but is recognized as a real opportunity and being addressed by several junior companies.
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https://investorintel.com/uncategorized/professor-dudley-kingsnorths-bullish-positive-position-on-ree-markets/