Rare earths are a group of exotic elements of the Periodic Table (Lanthanides, mostly), with unique electrical, magnetic, optical and other properties. Without them there’s basically no clean tech, green tech, advanced electronics, electric cars, and much more. It’s not that rare earths are geologically “rare.” It’s more that they’re so darned hard to process in industrial quantities, and into high tolerance end products. That is, the end products are mostly in the nature of “designer molecules.”
Thus, doing the rare earths gig is far more than basic exploration, mining and crushing. Doing rare earths correctly involves being really good in chemistry and chemical engineering as well. There’s nothing easy about it.
The big rare earths story for 2010 was how an otherwise obscure sector of the mining and processing industry became a destination point for billions of dollars of new investment. As 2010 drew to a close, we were in a market mania, in some respects, with some rare earth stocks “melting up.” The story was driven by China and its precipitous reductions in export quotas – front page news across the globe.
You may have seen the statistic that China controls about 97% of the world’s rare earths supply. Let’s not quibble about the exact number – a few fractions one way or the other. And when China ratcheted down its rare earths quotas during 2010 – part of a long-range strategic industrial policy, I must add – it shook the Western world to its industrial foundations. It’s all been a shock to the global trading system.
This shock has produced some shockingly large gains in the shares of rare earth mining companies. A lot of these stocks have become very volatile and frothy. So caution is warranted. But the rare earth story is very real and very exciting.
Don’t miss this one!
Source: Byron King
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