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Strong growth: CRT TV phosphors are
likely to see robust expansion in rare
earths consumption
gskx |
Welcome to the hangover, Nicolas Curtis, executive
chairman of Lynas Corp., told the Metal Events rare earths
conference in Hong Kong.
Curtis believes that the current
period constitutes the hangover from the price hike that took
place during 2011.
However, we dont think
it is a bad time, he said, but added we do think it
is a necessary time.
The industry changes both in
pricing and structure, are a necessary part of its development
but while a negative period is definitely showing, it does not
herald an extended decline.
Curtis harked back to the indium
market which, he said, compares quite closely with rare
earths.
The indium market saw the same
stockpiling, which lead to a dramatic rise in price, and the
same hangover that the rare earths industry has seen, Curtis
said, but the importance of this is that a stable price that
suited both producers and consumers was eventually reached.
Rare earths will likely follow the
same pattern: Prices will stabilise to a point that is
acceptable to both producers and consumers, Curtis
emphasised.
Challenges for new players
The hangover is causing significant
changes to the rare earth industry, Curtis added. Some of these
changes have solved problems while some have exposed fresh
issues.
Entrance is still a challenge for
junior companies and it has become more important to build a
supply chain but this is not an easy task.
Lynas has transitioned from a 5,000
tpa operation that was initially to be brought online quickly
for $30m capital investment to a project that has taken 10
years and cost more than $800m, so I can tell you, it is
hard! exclaimed Curtis.
Chinas
dominance
These supply chains are important
for new industry players to help shake the dominance that China
has on the rare earth industry.
We have allowed the midstream
IP [intellectual property] to move almost entirely to China
(...) and thats bad, said Curtis.
The rebuilding of a magnet supply
chain outside of China is critical to the industrys
future, he added, and it is unhealthy not to have strong supply
chains that exist across a number of regions.
The move to China, however, was not
because of the cheap labour but rather because of the work and
research the country carried out on rare earths, Judith
Chegwidden of Roskill Consultancy Group pointed out.
Many of the people you meet at the
research complexes, like Baotaos, have Phds and have
worked in the rare earths industry for 10 years, she said, so
this, rather than cheap labour, been responsible for the shift
of processing to China.
End user
substitution
With the instability caused by the
recent price rises during 2010 and 2011, several end users have
been gravitating towards rare earth substitutes.
Rare earths are still the
best materials to use, said Curtis, and so end users will
prefer to use rare earths if it is feasible.
For this, the industry has to build
trust and long-term relationships with the end markets, he
outlined, and find a long-term pricing level that will suit
both parties as well as a guaranteed stable supply.
Long-term
growth
Depending on supply stability,
Curtis believes that there is good long-term growth potential
in the rare earths industry.
Of the various end sectors, the
catalyst market will see the most robust growth and although
there have been movements away from the use of cerium, now that
prices have dropped slightly, end users should return to this
material.
The oil sector is, Curtis believes,
the most stable market in the industry and is likely to remain
so.
Of the other end markets, we
still think that there is a substantial period of growth in the
phosphors industry, he said, while acknowledging that this view
would promote controversy.