Agr Western Australia

Rare earths sector posts huge gains

The US is bracing itself for a seventh straight down-week with the futures indicating the New York Stock Exchange will be a house of pain again tonight after the Dow's 172-point fall on Friday.

The metals were all down, including nickel, despite its stockpiles in the London Metal Exchange being the lowest since August 2009. But, as the Python boys famously sung, always look on the bright side of life.

Because, amid all the gloom, there are some bullish sectors.

The recent developments in the rare earths sector have been nothing short of amazing.

Japanese magnet maker Shin-Etsu said last week that it would revise its prices monthly rather than twice a year because rare earth prices were rising so rapidly.

One US sector expert says some Chinese magnet makers are offering quotes that expire after only 72 hours, although specifying the final price will be set on delivery. And you can see why.

Dysprosium was worth $US410/kg in February, $US460/kg in March, $US900/kg in April and about $US1500/kg now.

Terbium, which was $US900/kg in April, is now $US3000/kg.

Should you buy rare earths stocks? Well, we put this to an industry elder yesterday and his answer was "yes and no".

Yes, it's a sector in which the successful companies will do well, but many hopefuls will fall by the wayside.

He believes some elements, particularly cerium and lanthanum (both have had huge price rises), will fall in price when the Mount Weld mine in Western Australia, owned by Lynas Corp (LYC), and the revived Mountain Pass mine in California come into operation next year.

Lynas's price is still being affected by an inquiry into environmental concerns about its Malaysian processing plant. Perhaps it should have stuck to the original plan: in 1992, the West Australian Environmental Protection Authority approved the plant's construction near Northam for then owner Ashton Mining.

Shares in the next two cabs off the rank are diverging.

Alkane Resources (ALK) has had a recent recovery and Arafura Resources' (ARU) stock price continues to drift.

It is hard to understand why in the latter's case because both companies are firmly on the road to production.

Hastings Rare Metals (HAS) has two rigs on its ground in the East Kimberley region.

This project hasn't been drilled since 1989, and not all the rare-earth elements were assayed then, but there is a resource figure that includes not only some of the more valuable heavy rare earths but zirconium and niobium.

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