Rare earth prices are on the rise again based on the Nolans Rare Earths mix average, benefitting Arafura Resources (ASX: ARU).
The latest price is US$75.23/kg based on current Metal Pages China FOB prices for rare earths oxides.
This is up from $70.52 at the end of December 2010 due to the decrease in Chinese export quotas for first half 2011 and increased demand for cerium and lanthanum.
Arafura's Nolans' project is one of the most advanced rare earths projects available to end users.
The company would receive over US$1.5 billion each year from Rare Earths sales alone at current prices.
Rare Earth prices are already 50% greater than the upside case Arafura used in its business update modelling issued in October 2010 and supplies will remain tight even when new projects are factored in.
Arafura is looking to secure finance for the Nolans Project by the end of 2011, and commence production in the second half of 2013.
In early January, Arafura produced a commercial quality of separated cerium oxide and a commercial quality of neodymium/praseodymium oxide at Nolans.
Rare Earths are critical to high tech industries including electric vehicles, rechargeable batteries, energy efficient lights and iPods, and there are limited alternate sources.
China currently supplies approximately 95% of the world’s needs for these strategic metals.
As rare earths constitute only a small portion of the cost of finished products, the impact of higher prices on the final article is not significant.
However, more price rises are thought likely if China continues to restrict exports in the interests of preserving resources for domestic manufacturing.