Rare Earth Metals Will Spike Higher in 2010

Posted by Jason Hamlin - Seeking Alpha

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Rare earth metals had a bumpy ride during 2009. After years in relative obscurity, the investment community suddenly discovered the potential returns from rare earths after the little-known metals were cast into the spotlight by reports that China might restrict exports and cause prices to move much higher. Several rare earth metal explorers watched their share prices double in a matter of weeks and some put in gains of over 400%.

The NY Times article “China Tightens Grip on Rare Minerals” helped to shine the light on the extreme geographic concentration of rare earth metal production. Over 95% of rare earth metals are currently mined in China and the Communist government is trying to ensure that all raw REE materials are processed within its borders. During the past seven years it has reduced by 40 per cent the amount of rare earths available for export and some are estimating they will begin halting exports as early as 2012.

Even if China continued exporting at current rates, demand is rapidly outpacing supply and many are predicting a 40,000 tonne annual shortfall by 2015. Watch the Reuters video on rare earth metals.

After a brief period of rare earth mania, the share prices of many companies have since returned to more fair valuations. But a rebounding worldwide economy and growing concern over China’s control of such a strategic resource are once again pushing rare earth metals into the spotlight. On January 2nd, an article in the UK Independent titled “Concern as China Clamps Down on Rare Earth Exports,” is once again stirring up investment demand.

……read more HERE (scroll down to the quotation by ZHAO ZENGQI:) for more analysis and company charts and profiles.