Rare Earth Elements
Rare earths, which are not so rare anymore are used for tons of industrial, defense, commercial, and even consumer based goods. Some of the uses of these metals include lenses, lasers, high-tech magnets, and advanced batteries. This country needs a type of technological revolution from the private sector and rare earths, along with uranium and possibly thorium, should see run in the next 5-15 years. China owns over 95% of the worlds rare earth metal production and recently announced that they were halting 70% of their exports. Even if, as some say, their economy is in a bubble because of the US economy, they still have hedged themselves very well for a significant drop in GDP.
I have mentioned that part of the reason I like silver is because of it’s industrial and commercial uses. Rare earths completely outstrip the uses of silver. Phones, TV’s, lasers, lenses, hybrid cars, bio-fuels and alternative energy, they are also included in tons of military technology like predator drones, cutting edge xm25 rifles, and infrared goggles. None of the modern technology that the department of defense plans to use for our military can be made without rare earths, and China already has the rest of the world by the throat in terms of supply. Some who are skeptical of China’s resource monopoly argue that rare earths are mmuch more plentiful outside of China. This is true, however those who claim that REE supply is not in jeopardy due to supply being abundant outside of China do not understand the mining business. Mining REE’s is a very difficult process and can take 5-7 years just to get a mine online. Part of what makes it so tedious is the environmental problems it causes when safety measures are not taken.
China has been getting away with destroying the environment in order to produce these metals at a low cost. However, their domestic production is set to run out by 2012 and they, like the rest of Asia, are now looking to find deposits in countries all over world, regardless of the geo-political risk. I expect to see a lot of consolidation in the market in the next several years beginning with the junior miners, perhaps even those that are not yet profitable. There is money to be made in alternative energy, America is continuing to phase out oil, REE’s are the lifeblood of hybrid cars and and clean energy.