Investors Stampede to Rare Earths

Dines Letter (06/19/2009)
"Not everybody is aware of what Rare Earths are, but they are crucial elements for a wide range of vital products that will dominate this century's growth areas: electric cars, windmills and solar devices! You can't make a battery small enough to fit into a cell phone, camera or wristwatch without Rare Earths. We also pointed out that corporations owned by China had cornered perhaps 97% of the world's Rare Earth production(!), suddenly striking fear into many industries that might wind up as indentured servants to Rare Earth producers. To be perfectly honest, we were shocked by the impact our last TDL had on the mining world internationally, setting off a stampede by investors to buy nearly all available Rare Earth investments, and with some mining companies actually rummaging around their assets to see if they had overlooked any Rare Earths in inventory!

. . . Returning to the original discussion of Rare Earths, the bottom line is that nearly all the world's dysprosium, neodymium, praseodymium, and terbium come from China. Toyota's nickel metal-hydride batteries and brushless DC electric drive motors required by Toyota and Lexus hybrids must have these Rare Earths or they don't get built! We find it remarkable that plans are being made for massive increases in production of those cars despite zero prospects of obtaining Rare Earths from China. . .

But the so-called 'killer app' for Rare Earths is that China's Ministry of Industry and Information Technology has already issued a mandatory plan for lowering its 2009 production output targets by 8.1% and 6.9% respectively, from last year, for Rare Earth products and smelting and separating Rare Earth products. Their production target for Rare Earth products is set at 119,500 tons for this year and 110,700 tons for smelting and separating Rare Earth products. China's Ministry also imposed a ceiling on tungsten, antimony, and tungsten ore concentrate and antimony ore, so the screws are already being tightened and 'The Coming Rare Earth Buying Panic' should not be too far in the future. . .we would buy half the intended position now and hope for general market weakness enough to drag them down to more favorable acquisition levels."

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