Two weeks ago we demonstrated what happens to prices of so-called "rare" earth minerals, which are almost exclusively controlled by China, and whose exports China recently decided to cut to a mere trickle, resulting in a 10+ fold increase in some of the most rare minerals in under a month. It also has allowed the third R bubble to persist as long as it has. It appears that the bubble is about to pop big time. According to Nikkei, "Vast deposits of rare earth minerals have been discovered on the seabed of the Pacific Ocean amounting to 1,000 times those on land, media reported on Monday citing a study by Japanese researchers." Of course, this could merely be one of those not quite definitive discoveries, which end up being disproven eventually, but which serve to merely pop a temporary speculative bubble. Just like the IEA. In the meantime, it may be time to temporarily erase the Rare from Rare Earth Minerals, and change Earth to Underwater.
The deposits are estimated to amount to 100 billion metric tons, the Nikkei business daily said.
They are believed to lie at a depth of 3,500 to 6,000 meters and cover an area of over 11 million square meters, the reports said.
China, which produces 97 percent of global rare earth supplies, has been tightening trade in the strategic metal, which is used in high-tech electronics, magnets and batteries, causing concerns globally about supply and triggering jumps in prices.
The study by researchers from the University of Tokyo and the Japan Agency for Marine-Earth Science and Technology is to be published on Monday in the online edition of the British science magazine Nature Geoscience, the reports said.
Japan's imports of rare earths from China fell 3 percent in May from April, the first month-on-month drop in three months, as the price of the metal surged, Japan's finance ministry said last month.
Demand could pick up later in the year as Japan continues to recover from the March 11 earthquake.
To those who say that this is very much like the US announcing there has been a record discovery of crude oil under the Marriner Eccles building, we would say you are spot on. But then again for the Japanese "recovery" scenario to proceed as expected, the prices of the commodities on the charts below have to drop by about 90% if the global economy has to have any chance of returning to a growth trendline. Otherwise, this may be yet another insurmountable bottleneck for the propaganda upside case courtesy of China.