Molycorp.Inc. (fka MCPIQ)

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Baotou Rare Earth Exchange to be launched before month end

2 Interesting developments announced this November.
The Baotou Rare Earth Exchange to be launched before month end

Guangdong South Rare Earth Product Exchange

The Baotou Rare Earth Exchange has had 2 false starts already. The last one due to software bugs.

Baotou REE Products Exchange

Let me pint this picture in case you weren't paying attention. In the very near future the Baotou REE Products Exchange will be controlling a huge total volume of rare earth mandatory/planned quotas, including Chinas mining production at 88%, smelting and separating production 82.3%. Together they'll control about 79% of China’s total export quota and they're pushing to bring the other 21% under their control. This is huge, the Baotou REE Products Exchange in concert with the Chinese government are dead serious and they mean business.

This has all the earmarks of a Rare Earth price-fixing syndicate to me.

To me this is a show just to placate the outside markets, they might as well bring all the state owned companies and Rare Earth Product Exchanges under one name. They are now well into a three-month campaign to stamp out and crack down on the illegal exploration, production and distribution of rare earths. Now a 2nd Rare Earth Product Exchange will help them straddle all the remaining miners across China.

You have to wonder if the remaining 21% which wasn't under the Baotou REE Products Exchange will now be picked up by the Guangdong South Rare Earth Product Exchange? We'll just have to keep reading but one thing is clear the Chinese Government wants complete control of this sector. Now that the REE mining has been consolidated down into a handful of state run companies they can push all the raw Rare Earth products through their new Products Exchanges. Even if the WTO forces China to lower their export duties and lift quotas China still plans to Tax and control every pound of Rare Earth shipped outside their borders. You can bet these Rare Earth Product Exchanges are being put in place to prevent any chaos and circumvention from the buyers as the WTO attempts to dismantle and remove government control.

In the West we believe in Free Markets and competition to correct our markets but we soon forget China is a Communist country who is looking out for China and their Government owned Rare Earth mining conglomerates. For those of us who believed we'd see lower prices because of the WTO intervention I believe we'll see the exact opposite as China tightens control.