US Rare Earths Report Tackles Chinese Monopoly

By Desmond McMahon– Exclusive to Rare Earth Investing News

China’s rare earth monopoly remains a concern in the US Congress as the Government Accountability Office tables a report outlining the industry; Cache Exploration Inc acquires more property at its Welsford location in New Brunswick; and, Japan is going underwater to search for minerals in its coastal zones.

Rare earth elements remain a hot topic with the US Government. After the US Congress debated the need for more competition in the global rare earth market, the Government Accountability Office (GAO), considered Congress’ investigative arm, issued a report warning of the impending rare earths crisis.

GAO’s report focused on how the global rare earth market directly affects US homeland security and national defense issues. But, in the process, the report arrives at several conclusions about the current state of the rare earth market and acknowledges China’s monopoly. The report also echoes global concern China will start to divert more of its rare earth resources to its domestic market, further squeezing the rest of the world’s supply.

Additionally, the GAO identifies countries with prospects of producing a commercial supply. Currently, only Chinese companies are producing and selling commercial quantities of rare earth metals and rare earth processing is still performed in China.

While conceding that significant rare earth ore reserves exist in China, focused mostly in Mongolia, the report suggests less-abundant, but more-valuable, heavy rare earth ore deposits are in Australia, Greenland, Canada, and the United States.

And, according to industry experts, some of these deposits could be in production by 2014. But, with an obvious shortage of rare earth infrastructure outside of China, experts expect it could take up to 15 years to completely rebuild a US rare earth supply chain.

The redevelopment of such an industry isn’t helped by the complex nature of rare earth markets. Of course, the term rare earth encapsulates many different elements and despite the name, many are not so rare. Each element has its own unique properties and uses that make its supply-demand fundamentals and price groupings equally unique.

Dudley Kingsnorth of the Industrial Minerals Co. of Australia estimates that three rare earth elements will be in short supply in 2015: Neodymium, the element used in wind turbines; Terbium, used in fuel cells and electronics; and Dysprosium, used in electronic storage like hard discs.

Cache Exploration Inc

Cache Exploration Inc (TSX:CAY) announced it optioned the Welsford Inner Claims rare earth property in southern New Brunswick, giving the company control over the entire Intrusive Complex.

Uranerz Exploration (TSX:URZ) sampled the area in 1980, searching for uranium, and the results revealed significant levels of rare earth minerals zirconium, niobium and yttrium. When Cache conducted soil sampling at the site in 2009, the results revealed high levels of neodymium and terbium, both expected to be in short supply, along with other rare earth elements.

Cache is actively seeking new rare earth properties to add to its Welsford claims and two rare earth properties in Newfoundland, Louill Hills and the Cross Hills.

The Cross Hills property is adjacent to Rockbridge Resources Inc’s [TSX.V:RBE] rare earth property, on which Rockbridge recently approved an initial work program. The area has been given a high rare metal potential rating by a Newfoundland Department of Mines and Energy Report and there have been significant historical assessments returned for zirconium, yttrium, niobium, cerium and thorium.

The Louil Hills property is located in eastern Newfoundland where historic sampling has shown zirconium-niobium-yttrium mineralization, and is therefore a favorable exploration target.

Japan Goes Underwater for Rare Earth

The US is not alone in scrambling to secure access to rare earth resources. Japan plans to scour the sea floors in its exclusive economic zone looking for rare earth minerals.

Kyodo News Agency reports Japan’s cabinet could approve the new strategy as early as June since resource-poor Japan hopes to cash in on the seafloor around its coast.

In 2009, Japan’s Agency for Marine-Earth Science and Technology announced plans to send robotic submarines to study areas near seabed volcanoes, where so-called hydrothermal vents belch out minerals. Experts believe exploiting those expensive-to-reach deposits will become feasible as some minerals become increasingly scarce in the world market.