Japan is now looking to develop mines in Vietnam and Kazakhstan to secure these minerals which are essential to the green and defense industries.The desperation seems high amongst the Japanese as they are also looking to prospect for these minerals in the seas surrounding Japan.Besides these efforts to secure these minerals from newer sources,METI is also looking to recycling and efficiency measures.A University of Tokyo geologist has said that around 100 billon of rare earth deposits have been discoverd on the sea floor of the Pacific in international waters.Note around 100-150,000 tons of rare earth minerals are used per year which would imply that just using this deposit would keep the global rare earth demand supplied for 10,000 years.

Chines Rare Exports in October have dropped dramatically to 3 figures from around 3660 tons in September reflecting  the Chinese-Japan Tensions and Export Quotas imposed by China for the 2nd half of 2010.While Japan has been frantically looking out for rare earth mineral resources in places like Mongolia,Kazakhstan,India and Vietnam,it will take around 4-5 years […]

Van Eck Global has come out with a Rare Earth Metals ETF (REMX) which offers investors an opportunity to get a diversified exposure to this commodity sector .Rare Earth has become a “geopolitical problem” rather than a demand/supply problem with Chinese monopoly over the mining and production of REE.Note materials for Green Industries have become a hot investment sector in recent days with current and future shortages fueling a strong price rally.Global X had launched a Lithium (LIT) ETF which is an investment vehicle into Lithium and Battery/EV producers.Like LIT which can hardly be called a pure play Lithium play,REMX is also not a pure investment into the REE sector.Rather it offers an investment into a wide variety of strategic ores and metals such as titanium,zirconium etc.REMX analysis shows that it is very well diversified geographically and across companies.This is a good in my opinion since many of the rare earth companies that have recently seen their stock prices shooting up are very risky.Most of these companies will take anywhere between 1-5 years to start production and the quality of their reserves,management,environment permitting etc. is highly uncertain.Note mining of rare earths is very environment unfriendly which is ironic since they are mainly used in Green Industry.Here is a list of the features of this new ETF

USA is the 2nd largest importer of REE and it has thought of taking the issue to WTO.But the WTO has proved to be quite toothless delaying the hearing of issue till 2011.Obama has decided to rake up the REE shortage in the G-20 meeting even as US Senate thinks of passing legislation to boost domestic sources of REE.Molycorp was up more than 11% forming yet another lifetime high on the news.Note the US Congress has already passed a REE law and the Senate needs to endorse the draft in order for it to become law.Rare Earth Elements have a Defense Angle to them as well as many of the REE such as samarium are used in Defense Products.Radars,Pathfinders,Smart Bombs and a number of hitech weaponry require Rare Elements for their production.Without a domestic source,USA might be put at a serious disadvantage in the coming decades.

Chinese Monopoly over Rare Earth Elements has Foreign Governments worried

Rare Earth Elements (REE) have become a hot media top with the unofficial Chinese export embargo to Japan.REEs are crucial raw materials for a wide range of industries in the Green and Defense Sectors.The Chinese monopoly over the production and supply of these commodities have made EU and USA thinking of taking the WTO route.However this had not detered China from clamping down on the production and exports.China wants to use these minerals as a strategic resource to force Green companies to relocate to China and transfer hard to get technologies to local Chinese companies.Note while EU and USA are looking to export Green Product to China,the government there has shrewdly only given permissions to companies willing to transfer technology.

Can India take Advantage to become a Leading Supplier

Rare Earth Element Deposits are found in many places in the world but due the Chinese undercutting of prices and lax environmental regulations had all but shuttered every mine in the non-Chinese geographies.Recent Chinese moves have opened up oppurtunities for REE mines as prices have increased by almsot 5-10x in the last few months.Lynas Corp is opening up a mine in Australia while Molycorp is reopening its mine in Mountain Pass,Californa.India also has a long history of production and export of REE . However its production of around 2500 tons is only 2% of the estimated Chinese yearly production of 130,000 tons.

Rare Earth Metals which are sold as oxides have seen an exponential price rise in recent months with the corresponding rise in stock prices of rare earth stocks like Lynas,Molycorp,Avalon,Jiangxi Copper,Chinalco,Inner Mongolia Bao-Tao etc.While China has now said that it will increase production and exports of rare earth minerals next year,the confusing signals are sure to keep the prices of the rare earth minerals high.Note the reserves and production of rare earth minerals are finite and their uses growing ,the prices of rare earth minerals are bound to increase.While the last 2 months increase has been due to a combination of geopolitical factors,quantitative easing and speculation,it looks in the years ahead rare earth price should keep increasing.Note other supply sources are being developed in Russia,Vietnam,Kazakhstan,Australia,Africa and Canada.So there will be a lots of ups and downs,however the secular growth story of rare earth prices is intact.