Rare Element Resources* (RES : TSX : $6.31)
The rare earths sector received a boost Tuesday after China‘s largest rare earths producer, Inner Mongolia Baotou Steel Rare Earth Hi-Tech Co., posted impressive results, including a quadrupling of is net profit.
The Financial Times –
reported that the main reason for the jump in Baotou’s profits was high rare earths prices. Adding that last year, in the midst of China’s crackdown on illegal rare earths mines, prices for rare earths skyrocketed by as much as ten times their value from a year earlier, before starting to slowly come down again. Baotou described China’s reforms of the rare earths sector as an
“unprecedented development opportunity”.
However, foreign governments around the world who have protested against China’s rare earth export controls, including the U.S. most recently, probably see it differently.
Batou warned eetreating prices in the second half of 2011 showed no signs of rebounding and that the company expects new competitors in the international market as resource exploitation picks up in Australia and the U.S.
The Financial Times added that if the WTO prompts China to ease its tax and quota system for rare earths exports, prices could fall further .