The rare earth market collapsed in 2011 as demand dropped substantially due to skyrocketing prices. While demand for rare earth metals surged on the back of increasing use of smartphones and tablets, much of the rare earth supplies at the time were controlled by China as the country placed export quotas, which pushed prices higher initially higher.
Around that same time, several North American producers began working on new projects outside of China. Just as the new supplies hit the market, demand fell sharply as manufacturers began using substitutes for rare earth due to the prohibitive pricing. The market though may be about to undergo another change.
According to Roskill, the global rare earth industry is expected to see major changes as new sources of supplies are added, as well as due to consolidation in the rare earth industry in China. China continues to account for a major part of the rare earth market, however, its share has gone down considerably from 2011 highs. Meanwhile, the market is expected to grow at a CAGR of 5.9% between 2013 and 2018.
The outlook has certainly improved and this augurs well for Canada Rare Earth Corp. (TSX-Venture:LL). Based in Vancouver, Canada Rare Earth is developing an international vertically and horizontally integrated business within the global rare earth industry. The company’s key focus is to generate revenues and positive cash flow from a variety of profit centers in the rare earth production and sales chain by sourcing, adding value and selling rare earths in all stages and forms.
This morning, Canada Rare Earth announced that it has entered into contracts to purchase and sell rare earth concentrate and oxides. The company noted that over recent weeks, it has arranged four transactions for the purchase and sale of 33 metric tons of rare earth concentrate and oxide products.
The transactions involve three suppliers and four customers situated in five countries on four continents: Europe, North America, South America and Southeast Asia.
Commenting on the development, Tracy A. Moore, CEO at Canada Rare Earth, said that the four transactions are each a significant corporate milestone and are each perfectly reflective of the company’s goal of establishing an international vertically integrated business within the global rare earth industry.
Moore further said that the transactions demonstrate a solid and tangible step forming the beginning of Canada Rare Earth's commercial involvement in supplying rare earth products to industry consumers. She added that over the past several years, the company has established itself as a recognized industry participant with in-depth knowledge and significant contracts and customer base.
Shares of LL have been on the move higher in 2016 as the whole mining sector goes through a bullish up turn after bottoming out in late 2015. At last check, shares of LL are trading even on the day at $0.03 on volume of 156,000.