State of the Rare Earth Metal Industry


"U.S. industry has started to scramble for strategic supply."

The economics, as well as the political landscape involving rare earth mining and production, has shifted a bit since the last time we spoke with Ed Cowle, president and CEO of U.S. Rare Earths Inc. in September of last year.

Yesterday, we wondered why U.S. industry hasn't been more vocal about shoring up raw material supply, particularly with the development of a new rare earth ETF (REE Fund), taking investments in rare earth mining, processing and manufacturing companies and this recent announcement about Dacha Capital having joined the Minor Metals Trade Association as a member for its role in "acquiring a physical inventory of strategic metals including rare earth elements." We fully support the role of ETFs in this industry.

Ed believes U.S. industry has started to scramble for strategic supply. Though not everyone in the world agrees that rare earth metals will fall into short supply, nobody disputes that China is the world leader in REE production and processing (with 97% world market share). From a strategic sourcing perspective, having more than one supply source IS ALWAYS preferable to having only one (especially one that has tinkered with rare earth metal export policies and even threatened to stop exporting five REEs altogetherósee New York Times story.

Molycorp's announcement of its impending IPO has galvanized the industry and brought the story of rare earth metals to the front pages. In addition, the GAO recently released a key report, which as one of its objectives, summarized the U.S. defense system's dependency on rare earth metals from China. Several articles have appeared, including this one highlighting U.S. military concerns regarding raw material stockpiles.

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