Sunday, February 27, 2011

Rare Earth Elements Update

As previously discussed on this site, Rare Earth Elements are still the most misunderstood sector in the market today.  We have also discussed that they remain trapped in Phase 3 of their Super Major Bull market run.  If you reference these posts you will be reminded of the quota cuts implemented by China, the gatekeeper to the worlds available rare earth supply.  The cuts are starting to hurt.
The chart below is a mix of elements that are being produced at one major Rare Earth mining operation.  Every deposit is different so this is not a specific template for all rare earth projects.  I watch this price mix every week and the rise has been staggering.  They just updated the pricing as it is already Monday down under.  The price of their mix has increased 27% in a week!

Rare Earth OxideDistribution200720082009Q3 2010
 Q4 2010
Lanthanum Oxide25.50%3.448.714.8823.6752.4992.10
Cerium Oxide46.74%3.044.563.8823.0552.6295.10
Neodymium Oxide18.50%30.2431.9019.1255.8181.38156.00
Praseodymium Oxide5.32%29.0529.4818.0354.3778.62140.50
Samarium Oxide2.27%3.605.203.4014.4036.5895.10
Dysprosium Oxide0.124%89.10118.49115.67281.54287.85460.00
Europium Oxide0.443%323.90481.92492.92585.31611.54800.00
Terbium Oxide0.068%590.40720.77361.67593.38620.38 800.00
Av.  Composition11.5914.8710.3216.0262.18112.26

This weekend I was reading an article on the new F35 Joint Strike fighter.  The US regime has gift wrapped press releases about this "amazing" plane.  Would you be surprised to know that the F22 Raptor is the preferred plane by insiders but not available in the desired quantity due to the amount of Rare Earth Elements necessary to produce the plane?
So, as we approach Phase 4, the market capitalization of viable rare earth mines will explode.  I believe that sovereign entities will desperately attempt to secure these vital elements.

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