In addition to the junior exploration companies, it is important to note that rare earth end-users are also becoming directly involvedoing upstream in countries such as Vietnam and Kazakhstan with the hope of finding new rare earth supply chains to decrease their reliance on China.For all of these projects, the difficulty will be competing with China on price, and providing the elements in proportion to what the markets need. Any company that accomplishes this will find itself in a very unique situation with vast upside potential. April 1, 2010 ReportCongress will get its first formal look at the rare earths industry as they have ordered "a report on rare earth materials in the supply chain of the Department of Defense" due on April 1. It is unclear what the impact of this study will be, or if it will spawn possible legislation, but it certainly has the potential to be a catalyst for changet least for the North American market.
Depending on its content, and what the next step isf anyt may have substantial repercussions.It is also possible that they might delay the report, as they don't have much time to properly understand the industry and assess it according to its strategic mandate.In addition to its affect on Congressional understanding, the response of the media, if any, will be important to watch.New ApplicationsThere is a history of dramatic shifts in demand for particular elements within the rare earths. When color television was invented, europium (Eu) became the keystone of a new industry. When samarium-cobalt magnets were first introduced, samarium became a superstar. Since then, neodymium-iron-boron magnets have catapulted neodymium (Nd) into the spotlight. Dysprosium (Dy) is the current darling of the sector, as it is used in hybrids to allow for operation at higher temperatures.There are thousands of scientists around the world working diligently to develop new innovations that utilize the rare earths. At any time, there can be an announcement of such an invention that can change the entire focus of the industry.The triennial REE conference in China entitled "The 6th International Conference on Rare Earth Development and Application" will be a gathering of scientists from all over the world (but mostly China) to hear about some of the latest developments regarding rare earth applications.
In addition to new applications, the expansion of current applications may also affect the market. One example is wind turbines. As wind power increases, the demand for Nd and praseodymium (Pr) for the larger turbines may increase dramatically. The UnknownThere will be unknown events in 2010 that will undoubtedly rock the rare earth market. We will watch with eyes wide open, but we will most likely be surprised like everyone else.Risk & the Rare EarthsPulling rare earths out of the ground is a tricky business. First, a substantive concentration of REEs has to be located his alone is challenging, as there are no surefire ways to prospect for rare earths. Many of the newer companies claiming to have rare earths are recycling old deposits or latching on to known occurrences with barely more than a grab sample. In addition, companies are also assaying for REEs as they target other commodities.Keep in mind that there are very few geologists that actually study the rare earthsnd fewer still that properly understand the economics involved.Even if a company has shown that they have rare earths in the ground, they now they have to identify and characterize the host minerals and determine if they are amenable to economic processing. Metallurgical studies must be done, as each project is unique. This is an exceedingly tricky business, but one that is also extremely compelling and has excellent growth potential over the coming years.
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