Replies to post #1634 on The Rising Influence of Rising Affluence

[DewDiligence]

Congrats, stuffit, on riding the MCP wave. You were wise to take some profits, IMO. Regards, Dew

[DewDiligence]

Venture Backs Missouri Mining Project

http://online.wsj.com/article/SB10001424052702303339504575566431066485278.html

›October 22, 2010
By ROBERT GUY MATTHEWS

Swiss mining and natural resources company Glencore International AG is joining with a Missouri company to reopen a closed mine, the second such U.S. effort responding to skyrocketing prices for rare earth minerals.

The development project with mine-owner Wings Enterprises Inc. comes as concerns heighten about China's tight grip on production of metals such as yttrium required in hybrid vehicles, wind turbines, flat panel televisions, defense missiles and satellites [#msg-41917016].

In July, Molycorp Inc. raised nearly $400 million in an initial public offering to reopen a rare earths mine in Mountain Pass, Calif., that had been shut since 2002 [#msg-49321049, #msg-55194118]. It expects to begin production next year.

China now produces about 97% of the world's rare earths and is increasingly reserving more of the minerals for domestic consumption. Last year, China sharply cut outside sales, causing alarm in nations dependent on the exports.

A number of other rare earth minerals mines are in the planning stages throughout the world, including Australia, Africa and Vietnam. Like the Glencore-Wings Enterprises venture, they could take more than a year to start production.

Wings Enterprises said the studies to re-deploy the Pea Ridge mine in Washington County, Missouri, could take up to eight months to complete. If given the green light, production could begin in between 12 and 14 months. The mine originally was owned by Bethlehem Steel and operated from 1964 to 2001.

"The project would produce three primary high value commodities: ultra-purity magnetite oxides, pig iron and rare earths," Wings Enterprises said. Glencore said it wouldn't comment beyond the statement.

Even if all the projects come online, it's no guarantee the rare earths supply problem will be solved, said Gary Billingsley, executive chairman of Great Western Minerals Group Ltd., a Canadian producer of rare earths used in magnets, motors and other defense applications.

"The situation could arise that when all these projects come on stream we could have a shortage of one element and not the other," he said.

In general, rare earths are divided into two categories, light and heavy. Light rare earths are more plentiful and more in demand but heavy rare earths are often irreplaceable and necessary for specific applications.

Mr. Billingsley said he began to notice the surge in rare earths prices around October 2009, when China reduced the allocation of rare earth minerals to other countries by 40 percent. The price of neodymium "went from about $12-$15 a kilogram to over $70 a kilogram" during that time, Mr. Billingsley said.

In the short-term, rare earths prices, along with angst, could remain pretty high. But as more production comes on line, the prices are expected to fall.

Despite the name, rare earths, the minerals, 17 in all, are not rare, according to the U.S. Geological Survey. China has about 31% of the world's rare earths reserves. The U.S. has about 15%, with the rest split between the rest of the world.

But China became the main producer when it was able to provide the rare earths more cheaply than its competitors, driving them out of business for the most part.

China was left with supplying about 97% of the world's demand for these products, Mr. Billingsley said. China consumes "about 50%-60% of what they produce and that is increasing and there is less and less available for the outside world," he said.‹