LI3 Energy Inc (fka LIEG)

[DFW]

Lithium and rare earths markets poised for growth
Friday, March 12, 2010

http://www.proactiveinvestors.com/companies/news/4741/lithium-and-rare-earths-markets-poised-for-growth-4741.html

It was an investor frenzy that truly came out of nowhere. In 2009, the hottest commodities around were lithium and rare-earth metals, which were completely off the radar until that point. Even now, many investors could probably not pronounce rare-earth elements such as dysprosium and neodymium in which they have eagerly placed their money.

Lithium got hot because of one simple fact: the emergence of new green technologies that require these metals in order to function, and specifically hybrid cars when it comes to lithium. There are no substitutes for these commodities, and investors quickly realized that the markets could become more constrained than they realized.

The result was staggering share price gains for any company involved in these spaces in 2009. For a while last summer, it looked like investors did not want to own anything else.

Of course, the frenzy eventually cooled off. And now the question is whether it was a one-time event or the start of a prolonged boom.

Car companies are worried about the lithium market because supply is heavily concentrated in just four companies: SQM SA of Chile, Rockwood Holdings Inc., FMC Corp., and Talison Minerals Pty Ltd.

The lithium market is currently about 120,000 tonnes a year, more than enough to keep up with demand.

My best guess is that demand will remain high and any subsequent production is probably going to be readily absorbed by market demand. In which case, the price of such miners could continue to rise, even over the long term.