SOURCE: The Bedford Report

The Bedford Report

November 21, 2011 08:16 ET

Dramatic Downturn in Rare Earth Prices Raises Concerns for Molycorp and Rare Element Resources

The Bedford Report Provides Equity Research on Molycorp & Rare Element Resources

NEW YORK, NY--(Marketwire - Nov 21, 2011) - Rare Earth stocks have struggled in recent weeks as disappointing earnings reports from some of the industry's up and coming stars cooled optimism in the sector. Additionally, a dramatic downturn in demand for the metals has caused prices to slide. The Bedford Report examines the Rare Earth Elements Industry and provides stock research on Molycorp, Inc. (NYSE: MCP) and Rare Element Resources Limited (NYSE Amex: REE) (TSX: RES). Access to the full company reports can be found at:

Rare earth prices have fallen dramatically in recent months. International prices for some light rare earths used in the polishing of flat-screen televisions and the refining of oil, respectively, have fallen as much as two-thirds since August. Lanthanum oxide, for example, was $5 a kilogram in early 2010. Lanthanum hit $140 a kilogram in July, then dropped more than fifty percent to $62 a kilogram in November.

A recent press release courtesy of Roskill Information Services explains that the downswing in prices is because buyers have reacted to rising export prices by staying away from the market and Chinese exports tumbled through the first nine months of the year.

The Bedford Report releases regular market updates on the industrial metals sector so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous analyst reports and industry newsletters.

According to Roskill Information Services, demand for rare earths is forecast to grow at 7-9% per year until 2015. Growth in the demand for neodymium and dysprosium in the manufacture of magnets will continue to be strong and could result in a supply deficit in 2015, the firm argues.

Trying to cash in while demand is still growing, Molycorp recently announced that it is speeding up plans to modernize and expand its flagship rare earth facility in Mountain Pass, Calif. The company is investing $114 million to increase its production rate, hitting certain goals three months earlier than planned. Molycorp said it earned $48.7 million, or 52 cents per share, for the quarter that ended Sept. 30. In the same quarter last year, it posted a loss of $10.1 million, or 15 cents per share.

Rare Element Resources has a 100% interest in the Bear Lodge Property in Wyoming, USA, which the company claims "contains one of the largest disseminated rare-earth deposits in North America (US Geological Survey Professional Paper 1049D) as well as extensive gold occurrences." The company's net loss for its fiscal first quarter ended September 30, 2011 totaled $10.9 million or $0.25 per share as compared to a net loss of $5.5 million or $0.17 per share for the same period in 2010.

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