Jim Rogers: Great Future for REEs
Source: Commodity Online (1/6/11)
"Supplies of illegally smuggled REEs from China are also tightening."
"The future of rare earths is great. What is happening is the prices are going through the roof because the Chinese do control the supply, but it is pure simple capitalistic economics now," Rogers said.
Rogers has been a proponent of astute investment strategies in commodities. Known for his investment fascination for China, Rogers said that rare earths make great investing sense because the bulk of the metal is produced by China.
"Well, China does produce 97% of rare earths. Uranium is not a rare earth but they do produce a lot of uranium, as well," he said.
Rogers said a lot of other [places] apart from China are opening mines because they can make a lot of money, and governments are behind it.
"So it's all going to bring a new supply and eventually the price of REEs will come down again. But. . .until the new mines can come onstream, somebody is going to make a lot of money," the author Hot Commodities and a Bull in China said.
China's continued export curbs are likely to fuel more anxiety, and supplies of legal and smuggled REEs from China are tightening.
"We do believe that this supply source is diminishing, and there is some evidence leakage over the border into Vietnam is diminishing," Roskill Consulting Managing Director Judith Chegwidden said, referring to the route smugglers take from southern China.
Analysts estimate half the world's legally sold REEs come from China, primarily southern China. About half comes from the same source, but is mined illegally and smuggled out of the country.
China reported export quotas for H111 would be lowered 35%, and defended those cuts by citing environmental concerns.