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Rare Earth Metal Supply vs. Demand

Written By Brian Hicks

Posted February 23, 2010

When you think of where your iPods, cell phones, computers and electronic motors come from, consider this: China holds 97% of the materials that allow these products to function.

All China has to do is halt the export of such materials, and we’re screwed.

Electronics would disappear from the shelves, and products that depend on these materials would see prices skyrocket — possibly bankrupting the very companies that depend on these sales.

And if China does decide to do something, get out of the way. Because for the Middle Kingdom, failure is not an option.

The implications of such a move would be devastating…

Unfortunately, there are many people that have little to no understanding of the importance of rare earth metals. Tack computers, TVs, high-tech gadgets, energy-reducing light bulbs, and many more on the list of modern necessities mentioned above.

But the worst part is the impact on our future: the impact a power play as such would have on electric batteries and motors — and on green technologies. So if China really does hold back on rare earth, we’d better have a plan on how we’re going to make up for the short supply — and fast.

And it could very easily happen by 2012…

According to The Independent, China could halt all exports of rare earth elements — reserving them for its own economic expansion — just two years from now.

And there’s nothing Congress can do, according to WD Publisher Brian Hicks. “It’s part of a plan that Deng Xioping claimed almost two decades ago: ‘Do for China what oil did for Saudi Arabia.’ “

Before long, many will panic — including Toyota, since their Prius depends on 2.2 lbs. of neodymium in the hybrid’s electric motor and 22-33 lbs. of lanthanum in the car’s battery pack.

Just take a look at the news from The Telegraph

Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that are produced only in China and play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors, and precision-guided weapons. A draft report by China’s Ministry of Industry and Information Technology has called for a total ban on foreign shipments of terbium, dysprosium, yttrium, thulium, and lutetium. Other metals such as neodymium, europium, cerium, and lanthanum will be restricted to a combined export quota of 35,000 tons a year, far below global needs.

Jack Lifton (a rare earth expert) believes this, too: “A real crunch is coming. In America, Britain and elsewhere, we have not yet woken up to the fact that there is an urgent need to secure the supply of rare earths outside China.”

Worse still, the majority of people, companies, corporations, and head honchos still haven’t caught wind of this situation…

But when they find out the hard way, they’ll need an immediate solution. Fortunately, we’ve found the solution, in a most unlikely place… more on that below. But first, let’s look at…

The Other Problem: Demand is Out-Pacing Supply

The other problem with rare earth metals is that demand is quickly outpacing supply. Over the last decade alone, demand has risen from 40,000 tons to more than 120,000.

And get this: In order to build more green technologies, for example, the world will need another 200,000 tons of rare earth by 2014, according to The Independent.

This news comes just as China threatens to cut exports to nothing by 2012… foreboding the disappearance of wind turbines, the Toyota Prius, iPhones, and the like.

But those Companies Unearthing Rare Earth are Skyrocketing as We Speak

To see just how urgent a need rare earth is, take a look at what’s happening to any companies unearthing rare earth.

Share prices of First Gold Exploration Inc. (TSX-V: EFG) skyrocketed as much as 180% after the company announced a new high-grade discovery of rare earth elements and lithium at its Éléonore Property in Northern Québec.

According to Wealth Daily‘s Luke Burgess:

The company reported that recent grab samples from an area between two of First Gold’s previous lithium and rare earth element discoveries — contained very high grades of lithium, rubidium, tantalum, beryllium, niobium, and gallium.

The announcement of the new discovery sent the stock soaring from $0.34 to a high of $0.95. Share prices cooled off by the end of the day to close at $0.68 — a 113% gain.

We’re even looking at a rare earth company in Greenland, which holds 25% of the world’s rare earth supply.

You see, on January 1, Denmark relinquished its sovereign hold over Greenland’s mineral rights. This made the country’s $273 billion rare earth resource private property.

While the company has already exploded about 160% to the upside, a recent pullback gives us the perfect opportunity to ride another run… This is a stock you buy, forget about, and check back on in a year when the rare earth metals boom takes hold.

Luckily, the editors of Pure Asset Trader have unearthed a rare earth find that could solve all our problems — and give China an extended middle finger.

Unfortunately, the mere mention of the stock in these pages of Wealth Daily would send the stock skyrocketing… and we can’t afford for that to happen. But you can read more about this opportunity in Pure Asset Trade. This new report details why you should mark your calendar for March 10. That’s the day this company is slated to start a massive field program on its Greenland property — and their stock is projected to increase 782% once the ball gets rolling.

Stay Ahead of the Curve,

Ian L. Cooper
Wealth Daily