Demand for rare earths is expected to grow steadily in the coming years, as sectors including electric vehicles, robotics, drones and data centres drive more use of the minerals.
One of the issues with the sector has been the dominance of China in the market, which has driven Western governments to support more project development in their own countries.
Broker Canaccord Genuity says this is one of the driving forces behind a strong outlook for ASX-listed companies which are either producing rare earths or intend to.
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Industry demand for rare earths to remain strong
The broker has issued a new research note which forecasts demand for key magnet rare earths to grow at a compound annual rate of 7% to 2035.
CG added that government support was making more projects viable.
They said:
Government-backed financing/floor pricing has firmed up new ex-China mine developments, with our revised forecasts now calling for more balanced market conditions in the global NdPr market from 2028-30. This is mirrored in heavy rare earths (DyTb, Y, Gd, etc.) where Chinese export controls/Western pricing premiums have incentivised plans for new Western separation capacity. Longer-term, we continue to forecast deficits in both markets given demand growth from existing and emerging segments (i.e. humanoid robotics) and challenges facing Western supply.
CG said there were "numerous challenges" facing the West's objective of achieving independence from China, "including mismatches between planned mine supply and oxide separation, and significant shortfalls in metallisation/alloying''.
They added:
In summary, our research points to China maintaining market dominance, with shortfalls in Western supply (and the likelihood of ongoing Chinese export controls) supporting bifurcated markets and pricing premiums (most evident in heavy rare earths).
CG said 2028 would be a key inflection point for supply with a number of ex-China projects coming online.
Plenty of buying opportunities in ASX rare earths companies
Regarding specific companies, CG has rated six ASX-listed rare earths companies as speculative buys.
These are: Arafura Resources Ltd (ASX: ARU) with a price target of 40 cents; Brazilian Rare Earths Ltd (ASX: BRE) with a price target of $7.35; Hastings Technology Metals Ltd (ASX: HAS) with a price target of 30 cents; Ionic Rare Earths Ltd (ASX: IXR) with a price target of $1.25; St George Mining Ltd (ASX: SGQ) with a price target of 26 cents; and Viridis Mining Ltd (ASX: VMM) with a price target of $6.50.
CG has a buy rating on Iluka Resources Ltd (ASX: ILU) with a price target of $7.25 and Lynas Rare Earths Ltd (ASX: LYC) with a price target of $23.
