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China to Globe: “No More Rare Earth”
Bloomberg
reports that China is cutting back 72% of its exports of Rare Earth
metals. China has said that environmental issues are the reason for the
cutbacks.
72% drop in availability of any commodity is important. RE’s are
important. I am no expert in this but I believe that RE metals are
needed in most things we make and consume. From cars to cell phones.
Some more informed comments on the importance of RE would be most
welcome.
Japan and the US are already protesting the ban. The rest of the world’s
manufacturing base will soon follow. This could become an interesting
row.
And all those folks were saying that China would be the world’s economic growth engine. Not.
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On a positive note, nuclear weapons can be built entirely without RE elements, so we're good there.
I wonder if any of the current "Shock and Awe" gadgets/bombs/drones/lasers/night vision/ witchymygigs currently at work aroung the globe by the US armed forces are 100% dependent on REs for their function and repair/upkeep?
Hmmm.
(see#551783)
Well hopefully this finally breaks the secular deflationary cycle in the cost of manufactured electronic and technology goods.
If stuff gets much cheaper, the industry will basically collapse, IMHO.
And how can one profit off this? Any ideas?
http://www.resourceinvestor.com/Pages/Resource-Investor-Rare-Earth-Metal...
Leo -To help put some U.S. unemployed miners to work .
Several REE companies mentioned , as well as lithium producers ( could use a hit of lithium right now )
USA :ROC - Rockwood Holdings,
TCK -TECK Resources LTD , SPECIALTY METALS -
SQM - can't spell in spanish
Rockwood Holdings Inc
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Hudson Resorces, HUD, TSX Venture........not as developed as Quest, QRM, and RES - Rare Element Resorces.
Hudson may be trying to sell itself partly by piggybacking on infrasture development to access and extract (Alcoa and the construction of proposed power transmission lines - proposed being the operative word) so revenue may be years away which probably makes HUD more of a property play.
Don't forget Avalon on the TSX. Buy the dip while you can.
I think Avalon (AVARF) is among (if not the) closest to production, so they might benefit most from a reduction in domestic supply.
Another problem, maybe a BIG one is that the USA apparently does not have the technical capability to separate and refine the Rare Earths. Japan, China and Europe are able to do that.
I read that Molycorp has just signed an agreement with Neo Materials (something like that) in Canada, who may be able to separate and refine.
Outsourced those (high paying) jobs too. Oh dear.
Yes, especially RES-v
Buy Chinese solars?
=)
Got that right Holmes:
Leo Kolivakis
Dude, it's "Homes", like Homeboy shortened.
You white people
You're likely black. It's holmes if your mexican.
http://www.urbandictionary.com/define.php?term=holmes
You blue hair people
home skillet
wurd
I believe he is making reference to Sherlock Holmes.
No Shit
No, it's 'Holmes' like in 'Wadd'.
White people know how to spell.
I think Holmes iz much better. Homieboy workz better, too.
run and tell that, homeboy
http://www.youtube.com/watch?v=hMtZfW2z9d
Short GE. But actually that is my answer to every question....
GE the stealth financial.
My big winner of 08, JAN 09 25 PUTS oh yes.
Shame the TARP whatever bailed out their commercial paper operation or would have been 100% win like New Century. Used to be just figure out a POS company and wait for them to self destruct. Lot harder nowadays.
You are going to be one rich dude
Hahahaha! (I refuse to use L*L)
That's too funny!
Sounds like an investment opportunity.
TANTALUM... Bitches!
Commerce Resources Corp. {CCE.v}
http://www.commerceresources.com/s/Home.asp
... an exploration and development company with a focus on tantalum, niobium and rare metal deposits....economic grades ... large tonnages. The Company is specifically focused on the development of its Upper Fir tantalum and niobium deposit in British Columbia, Canada. Commerce is well positioned with sufficient capital to advance the commercialization of a lucrative mining operation for tantalum and niobium.
August 19, 2010Commerce Resources Corp. Drills 1.72% TREO over 215.30 metres in First Hole at the Eldor Property in Quebec
Commerce Resources Corp. (TSXv: CCE) (FSE: D7H) reports that the results from the first hole of the 2010 drilling program at the Eldor Project, located in northeastern Quebec, confirm a significant new REE discovery at the Ashram Rare Earth Zone.
Thanks for the post, Bruce. From my understanding, Rare Earth's are critical elements in most new technology products and China is responsible for close to 100% of world production. Apparently they are environmentally costly to produce. I guarantee you the rest of the world's governments are going to be getting into this in a big way, given their strategic importance.
Clayton Bigsby
I thought the reason is China wanted to produce products relying on Rare Earths. That way the control the resources and the manufacture.
Besides, isn't this like six months old news wise?
What are South Africa, Greenland and Afghanistan, Alex?
Apparently they just discovered a BIG rich deposit in Greenland, close to the western coast. I do not know much about it.
Recently listed Molycorp (MCP I think, Goldman Sachs was recently a 25% owner, but do you want to buy what GS is selling?) has an old mine in California, but almost all that it can produce are the "light" rare earths, but Neodymium (a light) is used in magnets (wind turbines).
Rare Earth Resources (also newly listed, hmm..., REE) is looking at a prospect in Wyoming.
Yes, there are miners in Australia and Canada looking around as well.
The Rare Earths are used in huge number of electronic and other products. Like the color red? Europium is the metal used to make the red phosphors on TVs, etc. Dysprosium is used with Neodymium to make permanent magnets stronger. Terbium has a few uses, but I forget what they are (magnets as well I believe).
Last I looked, the highest prices of the metals were for Europium and Terbium. Note that in their pure metal state that many of them oxidize easily if not kept properly.
Re, Rare Earths, I just do not know about S. Africa and Afghanistan, the latter apparently has a lot of Gold and Lithium.
...
Thank you for another very good article Bruce. This one is on an important topic.
I wouldn't overlook Namibia. In addition to sand dunes and Etoshia Pan
there's this:
http://finance.yahoo.com/news/NAMIBIA-RARE-EARTHS-CLOSES-5-cnw-117744055...
Something just tells me that the supply/demand thingie will kick in. Might not be a bad situation for the U. S. in the long run -- I just hope it's not too long.
IMF rape resorts?
The key points are that REMs aren't rare in the sense that gold is rare, they are rare in the sense that you have to dig up a lot of earth to produce a substantial quantity. If you know how China operates, then you can imagine what the mining firms are doing. China became the dominant REM supplier because they are tearing up the earth in large quantities and now the government is getting serious about protecting the environment.
I would like to know how much they are cutting back. If it happens to magically land in the zone to keep marginal producers from entering the market, then it looks suspicious. But with Australian, Canadian and American miners looking to exploit the market, this doesn't seem like an aggressive policy by the Chinese, since it guarantees competition 5 years down the road.
China is currently 97% of current production. They are cutting 72% of that. So by the numbers this is a big deal.
Value added manufacturing mercantilist policy is not a actual reduction of 72% of REMs exports.
China simply wants to increase the value added manufacturing base in country.
As you well know, CHina has been busily converted US$2 Trillion in US Gov. debt in to 2000 separate US$1Billion commodity trade deals, while the value of the US Treasury notes still held marketable value to the greater fools in the 3rd world.
China's monetary reserves comprise about $2.4 trillion, but only about $800 billion of that is U.S. debt, and that figure is down from $900 billion earlier this year. They are in the process of liquidating their Treasury position at the rate of about $200 billion per year.
You might think that this means they will need four more years to get clear of the Bernanke steamroller, but they have also rolled much of their holdings to the short end of the yield curve, so they can simply allow these to roll to maturity and collect their funds--no need to roil the markets with Treasury dumping.
No, China is cutting 72% of its rare earth exports. Or at least saying it will. Most processing/manufacturing of rare earths into semi-finished or finished products (mostly catalytic converters, rechargeable batteries and magnets) occurs in China. The clear intent of the export quotas is to further increase China's share of processing and manufacturing. But near term, China's production would surely fall ... if these quotas are actually enforced. I guess this announcement is tentative and part of broader bargaining.
Besides, this obviously is related to power games between Chinese rare earth miners and Chinese processors/manufacturers. The latter will pay less if the former are forced to dump excess product domestically.
There's a good overview of rare earths here: http://seekingalpha.com/article/103972-rare-earth-metals-not-so-rare-but-valuable
They have to. They have very little water and if they ruin much more of it they are in huge trouble.
Don't worry
1. They said that numerous times. It has yet to materialise. It will always be available on the black market anyway, thanks corruption.
2. There are REM (Rare Earth Metals) everywhere. It's just that the chineese extract it for cheaper because they don't care about the environment. If prices go up, old mines (there used to be a huge one in europe) will reopen. There may be a gap between the production of the reopened mines and availability but as I said in my point 1. Chinese corruption will solve everything.
The problem with the black market is that US companies are subject to the Foreign Corrupt Practices Act, which does actually seem to be enforced. So a US company is basically SOL for buying black-market RE's from China. Big competitive advantage to anyone and everyone who isn't US.
Which is exactly why US companies buy rehabilitated Chinese black market goods from Russia. Where there's a buck, there's a way.
Shades of Smoot-Hawley! This makes good sense to the Chinese-instead of exporting raw materials, they will export high-tech finished goods. Chinese mines were a cheap source of rare earths for many years. It will take a few years for the old rare-earth mines to get back in production, and prices will rise (what's new?).
And remember that a few years back China was massively buying up miners (rare earth, gold, silver, copper, making oil deals, etc). As a point of fact, China produces/controls about 95% of rare earth metal production. Good luck with that 'green' initiative USA without access to high quantities of rare earth metals.
Hey don't tell me that shutting down all of those US mines out in California and Nevada was a bad idea, the PTB said it was all good! And the PTB wouldn't lie to us, would they? Would they?
*crickets*
From a strictly selfish US standpoint, using up the resources of other countries around the world and saving our own for later is smart. Possibly anticipating this, the US mines and processors have been firing up over the last 2 years, but they are not quite ready yet. Unfortunately virtually all of the processing equipment and technology still resides in China.
and how's that floating renmimbi thing workin' out for ya?