(No So) Rare Earths - Illustration of the Power of the Market Economy - Part 2

Market forces, set in motion by the monopolistic and dictatorial behaviour of pseudo-communist-really-fascistic China led to the discovery of two gigantic deposits of Rare Earths:
  • one containing about 100 times the current global reserves of Rare Earth metals have been found by the Japanese in international waters.
  • the other one in Nebraska may be sitting on the world's largest untapped deposit of "rare earth" minerals
Note that it only took a few months to make such incredible discoveries. The lessons?

  1. Do not interfere with the markets, let them do their thing, good thing will happen
  2. Be careful when you speculate and bank on the rarity of an item or asset: if prices are driven high enough, one way or another new supply will reach the market
  3. When you hear that oil will reach $1,000 (or read statements like Jim Rogers "no oil available at any price"), become very sceptical. Demand might be more elastic that you think, and more importantly, supply or newer form of replacements might appear all of the sudden
  4. If you are still long the Rare Earth, it's most likely time to sell...
Here are quotes about the two discoveries.

2011-07-04 (Reuters) - Vast deposits of rare earth minerals, crucial in making high-tech electronics products, have been found on the floor of the Pacific Ocean and can be readily extracted, Japanese scientists said on Monday.

"The deposits have a heavy concentration of rare earths. Just one square kilometer (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

The discovery was made by a team led by Kato and including researchers from the Japan Agency for Marine-Earth Science and Technology.

They found the minerals in sea mud extracted from depths of 3,500 to 6,000 meters (11,500-20,000 ft) below the ocean surface at 78 locations. One-third of the sites yielded rich contents of rare earths and the metal yttrium, Kato said in a telephone interview.

The deposits are in international waters in an area stretching east and west of Hawaii, as well as east of Tahiti in French Polynesia, he said.

He estimated rare earths contained in the deposits amounted to 80 to 100 billion metric tons, compared to global reserves currently confirmed by the U.S. Geological Survey of just 110 million tonnes that have been found mainly in China, Russia and other former Soviet countries, and the United States.

Details of the discovery were published on Monday in the online version of British journal Nature Geoscience.

The level of uranium and thorium -- radioactive ingredients that are usually contained in such deposits that can pose environmental hazards -- was found to be one-fifth of those in deposits on land, Kato said.

A chronic shortage of rare earths, vital for making a range of high-technology electronics, magnets and batteries, has encouraged mining projects for them in recent years.

China, which accounts for 97 percent of global rare earth supplies, has been tightening trade in the strategic metals, sparking an explosion in prices.

Japan, which accounts for a third of global demand, has been stung badly, and has been looking to diversify its supply sources, particularly of heavy rare earths such as dysprosium used in magnets.

Kato said the sea mud was especially rich in heavier rare earths such as gadolinium, lutetium, terbium and dysprosium.

"These are used to manufacture flat-screen TVs, LED (light-emitting diode) valves, and hybrid cars," he said.

Extracting the deposits requires pumping up material from the ocean floor. "Sea mud can be brought up to ships and we can extract rare earths right there using simple acid leaching," he said.

"Using diluted acid, the process is fast, and within a few hours we can extract 80-90 percent of rare earths from the mud."

The team found that sites close to Hawaii and Tahiti were especially rich in rare earths, he said.

He gave no estimate of when extraction of the materials from the seabed might start.
Rare Earth are not so rare anymore.
Washington Post 2011-08-03 — Elk Creek, Neb. (population 112), may not be so tiny much longer. Reports suggest that the southeastern Nebraska hamlet may be sitting on the world's largest untapped deposit of "rare earth" minerals, which have proved to be indispensable to a slew of high-tech and military applications such as laser pointers, stadium lighting, electric car batteries and sophisticated missile-guidance systems.

Canada-based Quantum Rare Earths Developments Corp. last week received preliminary results from test drilling in the area, showing "significant" proportions of "rare earth" minerals and niobium.
Quantum acquired a circular piece of land - a bit more than 4 miles in diameter - near Elk Creek late last year. The land, which the U.S. Geological Survey projects may have one of the world's largest deposits of niobium and rare earths, has since been poked, prodded and drilled to determine whether it held any niobium, which has never been mined in the U.S., or rare earths, which the U.S. has not mined in almost 10 years.
The Quantum project is the latest example of U.S. attempts to become less dependent on foreign sources for the obscure minerals found in few places on earth, but essential to a variety of modern gadgets.

The U.S. has relied on China for years for the 17 minerals that are defined as rare earths by the International Union of Pure and Applied Chemistry. Despite having such obscure names as praseodymium, promethium and samarium - no copper or zinc here - they are necessary for such routine contemporary technologies as magnets, laser pointers and miniature electronics, such as iPods.

"Without these minerals, our cellphones would be 3 pounds," Quantum CEO Peter Dickie said.

The U.S. used to produce rare earths through the Mountain Pass Mine in California, but it was shut down in 2002, primarily because of environmental concerns, including the spillage of hundreds of thousands of gallons of water carrying radioactive waste into a nearby lake.

China has emerged as the world's predominant supplier, controlling 97 percent of the global market for rare earths. In recent years, lawmakers have expressed concerns about China's "rare earth" dominance, and these concerns were heightened when Beijing temporarily halted exports to Japan last year during a territorial dispute.

Another essential mineral Quantum hopes to mine is niobium, a steel strengthener used by the automotive and aerospace industries.
On July 5, the U.S. and European Union won a major case against China when the World Trade Organization ruled that China was engaging in restraint of trade by keeping world supplies low on several other minerals on which it is the major supplier. Trade analysts said that ruling could set a precedent for a future rare-earth minerals case that also could loosen China's grip on that market.
"It's important to develop other sources [for rare earths] in the United States and not be so reliant on China," Mr. Coffman said.  
[...] Other companies racing to exploit the rare-earth rush include Molycorp, which is attempting to reopen the former Mountain Pass Mine in California and recently secured the environmental permits to proceed there.

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