Rare earths prices rise as demand runs ahead of supply
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Special Report: The growing disconnect between rare earths demand and supply has kept prices of neodymium-praseodymium (NdPr) oxide ticking upwards.
Assessments by Shanghai Metals Market (SMM) showed that the price of NdPr oxide rose an average ¥3,000 ($618) per tonne on the week to between ¥328,000 and ¥333,000 per tonne as of Monday, September 16.
Prices of neodymium oxide also increased by ¥3,000/t during the same period to ¥330,000- ¥335,000/t.
SMM expects the recovery of downstream consumers – read, magnet manufacturers – and potential supply tightness on capacity closure to support prices of light rare earth oxides, including NdPr oxide, for the rest of the year.
This opinion was shared by Arafura Resources (ASX:ARU) managing director Gavin Lockyer who said that with a number of automakers now starting to put in long-lead orders for magnets, prices should start to reflect that demand strength.
“Longer term, I think there is a growing shortfall between demand and supply globally including China which will mean that prices start to follow a more structured demand/supply dynamic rather than it potentially being artificially kept low by the Chinese,” he said.
Lockyer added that rising prices would result in greater awareness about this growing supply shortfall, which would in turn lead Arafura to attract further investors such as Singapore-based Talaxis Holdings, a wholly owned subsidiary of commodities trader Noble Group, and other key international funds.
“I would like to think that the groups that came onto our register in the July capital raising are dipping their toes in the water,” Lockyer said.
“And if we can deliver what we said we are going to deliver, then that gives them confidence that we can execute the bigger project, potentially leading to more injection of capital from those parties.”
Arafura’s Nolans project in the Northern Territory is forecast to produce the bulk of its revenue (85 per cent, to be precise) from sales of NdPr oxide, a rare earth compound used to make ultra-strong permanent magnets for micro-motors and the drivetrains of electric vehicles.