Looking back over the last few years, there has been a notable change in the rare earth company landscape as well as in pricing. But while the market has yet to show any significant recovery, it looks like market watchers have started to get a handle on what makes a good rare earth company.Christopher Ecclestone, principal and mining strategist at Hallgarten & Company, recently shed some light on the current state of the rare earth market with Rare Earth Investing News, explaining, "one of the problems at the peak was that there were so many companies" — so many, in fact, that "most of the pundits couldn't tell the difference between one [company] and the next." Ecclestone also said that the general consensus in the sector was "'the bigger the better,' because the bigger stock is going to be a $2-billion rare earth stock." Unfortunately for people invested in that mindset, "what happened is the ones that were really big have fallen just as much as the small ones." But it's not all bad. Given the fact that so many rare earth companies have died off, the market now has a clearer idea of which of the ones still standing have a chance of reaching the end goal of production.
Size does matterOne of the interesting tidbits of information I gleaned from my conversation with Ecclestone was his view on the size of rare earth companies. As mentioned, in the past, much investor attention was focused on stocks that — several years ago — looked like they were set to go through the roof in terms of market capitalization. However, Ecclestone referred back to a comment from Jack Lifton about "right-sizing" rare earth mines, something he believes is starting to really take shape in the market given the high budgets of many rare earth projects.