“Overnight there were 200 companies suddenly marketing rare earths, from just five in 2009,” he said. “While large projects like Lynas‘s will still be viable, smaller projects will struggle, and a lot of those 200 companies will go away again.”
“In the light rare earths market, supply growth is plentiful and there is an immediate concern about what that supply does to pricing,” said Tim Schroeders, a fund manager at Melbourne-based Pengana Capital.
Some rare earths are falling out of favor faster than others. A kilogram of lanthanum oxide—used in oil refining and hybrid vehicles—now fetches just US$13 a kilo, compared with an average US$104 a kilo last year.
Lanthanum is a light rare earth that is more widely available than heavier elements such as dysprosium, which is used in control rods at nuclear reactorsand magnets needed in the electronics industry.
Cerium oxide, which is used in catalytic converters and plasma televisions, is now down to US$16 a kilo, from US$102 a kilo last year. The value of neodymium oxide, used in wind turbines and music players, has fallen to US$85 a kilo from US$234 a kilo.
The consequence is that some companies are already stopping operations like Inner Mongolia Baotou Steel Rare-Earth.