EDITOR: | May 28th, 2015 | 8 Comments

Spratly Islands’ dispute redirects investors to Hastings heavy rare earths

| May 28, 2015 | 8 Comments
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spratlyChina is expanding the Spratly Islands in the South China Sea in contested waters that the US is following closely. A little too closely the Chinese think. This could affect the rare earth trade that China controls. As a result, the west will be looking more closely at deposits outside of China, like the one in Australia owned by Hastings Rare Metals Ltd, (ASX: HAS).

Tensions in the Spratly Islands have sparked interest in what these events may do to the price of rare earths, and rare earth companies. The dispute is largely over potential oil reserves, but the events are reminiscent of the China-Japan dispute over the Senkaku islands in 2011 that caused China to cut off rare earth supplies to Japan. And current tensions with the US makes people wonder if China would use rare earths as a bargaining chip to get control of these islands. Finding other viable sources, especially in the Asia-Pacific area are always a concern. Hastings has a deposit of heavy rare earths that may benefit from all this in the race to supply minerals from outside of China. And maybe China knows something about deep sea mining of rare earths that the Japanese have said is unfeasible. Perhaps that would be a reason to build islands?

Regardless of why China is expanding the Spratlies and building an airport, these sorts of tensions usually push up the price of materials that are both shipped through the region, and sourced nearby. The world is hugely dependent on China for rare earths and if they experience negative repercussions from claiming islands that several countries claim, and are closest to the Philippines, then they may retaliate in a sector that all modern technology needs. The import-dependence, and the fact that China controls over 90% of the supply means that deposits in western countries like Hastings’ are being examined closely as a way to lessen dependence on China.

Hastings has two deposits of heavy rare earths in Western Australia, Yangibana, and Brockman. They released a news release May 20th, regarding pre-feasability (PFS), drilling at Yangibana. Their first target is the high neodymium mineralisation at Bald Hill South. A new target that was drilled in the 1980’s will also be tested. They have also applied for a fourth mining lease, at Yangibana West, which will also be drilled as part of the PFS program. In late 2014 Hastings finished a Scoping Study of the Yangibana Project that confirmed the economic viability of the Project. In early 2015 they commenced work on the Pre-Feasibility Study.

When the PFS is released, if it infers that this could be a producing source of these critical heavy rare earths, it may speed up the process. If tensions continue, it could spur the west to produce rare earths more quickly. What is certain is that China will continue to control the industry whether there are price or availability shocks or not. To lessen dependence on China for these minerals, the west will be looking towards the news about deposits of heavy rare earths like Hastings’.


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Comments

  • Investor

    Marketing 101. Fantastic!
    Grab the news and make out of it what you want, turn it to your advantage.
    I am loving it!

    May 28, 2015 - 3:39 AM

  • charles.1

    I was about to make the same comment “Investor” but you stole my thunder. Great political speak. Must be a very slow news day.

    May 28, 2015 - 6:47 PM

  • Giovanni Dee Tan

    SPRATLY.com for sale

    May 29, 2015 - 12:29 AM

  • Giovanni Dee Tan
    May 29, 2015 - 12:30 AM

  • James Backus

    There must be twenty companies, particularly in Canada, that have tested for Rare Earths and are ready to dig. But that doesn’t solve the big problem. Who’s going to process the raw REE? No one writing articles seems to understand that digging the hole is the easy part. Processing the ore into finished product is the bottleneck. Only Lynas and MolyCorp can do this besides the Chinese REE companies. So Hastings is about four or five years and a half billion or more dollars short of processing a kilogram of REE. After the problems with Lynas and MolyCorp, who is going to go out on a limb for a half billion dollars? Bets of luck, Hastings.

    May 29, 2015 - 6:00 AM

  • lea

    People are processing there own in Australia.. YOU dont need a ….. And BILLION DOLLAR PROCESSING PLANT anyone who has been following the Hree market would understand the importance of what China is doing NTU has its own small PLANTS and Hasting is buliding one >>> YOU three Idiots dont even know what you are talking about … And CHINA spent lots of money trying to stop LYNAS buliding in Malayasia >>> the MONEY is in the HEAVY HREE …………. go do some READING PEOPLE

    May 29, 2015 - 5:25 PM

  • asrms

    Is it a case of REDUCING dependence by the rest of world on China’s LREEs and HREEs or ENTIRELY weening themselves off Chinese supply? Seems to me if you get 50% of your REEs from a non Chinese supply but still rely on 50% from China you have not really achieved much if that Chinese 50% is vital to fuel your country’s needs. I think we should be talking about entire supplies being obtained from non Chinese sources, especially if we see Chinese-Asian-West relations seriously deteriorating (not necessarily to armed conflict but potential economic conflict). I think a handful of REE producers will make it (along with Japanese-Lynas, which heaven help me I own), but we are looking at a number of years before those few come to production.

    May 30, 2015 - 5:33 PM

  • JJBeswick

    Lea maybe you should calm down and do some reading of your own before making claims such as ” the MONEY is in the HEAVY HREE “.
    Actually, no.
    Using Hongpo’s Chinese (only) production figures, easily obtained prices and some rough back of envelope calculations we see the following.
    By value:
    – about 12% of the market is Ce/La (assuming all production is sold): cracking, catalysts and polishing.
    – Nd/Pr, the key magnet metals, 57% of the RE market.
    – The “heavies” are 23% of the market, 14% of that from Dy. Most of the Dy, at least until thrifting really takes hold, is headed to magnets as well (along with some Tb).
    – The remaining HREE market is mostly phosphors (in particular Y’s 5%) where demand is dropping as LED tech takes over.

    It’s then easy to see that the real RE market- even the current HREE market- is dominated by magnets.
    http://investorintel.wpengine.com/technology-metals-intel/rare-earths-prices-in-china-expected-to-see-another-sharp-jump-before-may/
    (Mostly previously posted -in error- on an old thread.)

    May 31, 2015 - 9:27 AM

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