Ed’s Daily Notes for June 4th   10 comments

Bloomberg: China’s Rare Earth Toxic Time Bomb to Spur Mining Boom

The toxic time bomb set by China’s rare earths mining boom is set to boost the prospects for some of the $12 billion of projects being developed outside the world’s biggest supplier.

As part of its pollution clean-up, China, which controls 90 percent of the global market, is studying the introduction of new taxes and regulations for rare earths in the second half that are forecast to drive prices higher.

The measures will add to pressures loosening China’s stranglehold on the production of rare earths, 17 chemically similar elements used in products from Apple Inc. (AAPL)’s iPods to Toyota Motor Corp. hybrid-electric cars and Tomahawk cruise missiles made by Raytheon Co. (RTN)

If you were looking for a bell to signal when to buy into a rare earths company, this is it. The article above mentions multiple rare earth miners, but keep in mind that not all rare earth companies are equal, with differences comparable to the difference between a gold mine and a silver mine. However, Australia’s Lynas Corp. still remains the leader in the field, mainly because they have an active operation.

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Posted June 4, 2014 by edmcgon in China, News, Rare Earths

10 responses to “Ed’s Daily Notes for June 4th

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  1. Thanks Ed! Think I’ll be buying some small portion of Rare Earths, they are running pretty low the pas year.

    For those who are interested in Rare Earths, these are the ones I favor:
    – Lynas (but not that much, they only have the light REE, which are plenty)
    – Great Western Minerals (light and heavy REE, goverment which favours them, and they have a daughter company which is already producing magnets – they have everything, from mining to product).
    – Stans Energy (Kazachstan, they have a proven production, which many of the juniors are struggling with, mainly heavy REE, but low grades and a government which is blocking them – a gamble, but a good one)
    – Tasman Metals (best placed for Europe, have read a lot good of them)

    which I do not favor:
    – Molycorp (they have nice properties, but terrible managment,
    – Avalon, and the others which are many many years from production – they will arrive too late.

    • plas,
      I couldn’t agree more about Molycorp.

      I could be tempted by a junior miner with heavy REE’s. Even if they are late to the game, and the price of heavy REE’s drop, they’d still make a killing with a good heavy REE mine.

      • My favorite is GWG. The have Steenkampskraal as a jump-start for a few years (it is an old mining-facility), and then they have Lake Hoidas for in the future. They have a mining-to-magnet strategy, so they can sell raw material and also sell the end-product.

  2. sold gtat for a 4% gain.

  3. I like Lynas and own a full position. Price is way down and I’m sitting on a huge loss right now. Be careful, Lynas is having some significant liquidity/cash flow problems at the moment.

    • plas,
      While it could, I doubt the Chinese government would let it.

      On a related note, I see copper bounced off the 50 day MA today. We’ll see if it holds tomorrow.

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