Rare Earth Elements: Who Is Poised to Takeover?

While the embargo against North America and Europe for Rare Earth Elements (REE) was dropped after a short period in October, the impact on prices for REE companies had already been seen. High-tech electronics producers flinched madly, as the need for REE in the manufacturing of their products was briefly held hostage, especially for those companies in Japan which had an even longer embargo placed upon them from mid-September to late-November. Another spike at the tail end of 2010 resulted from the announcement that China (which controls 95% of the world's current supply of REE) would be restricting rare earth exports by 35% for the first half of 2011. Not even a month after the dust cleared from that announcement, now reports are coming out that hold implications into the future, as stricter environmental guidelines will be enforced upon China's producers in the near future.

In the aftermath of such changes, we are looking at everything from potential catastrophic shortcomings of supply by 2012, to at the very least a surge in price that will benefit all foreign companies that have amassed operations in the leadup. Already we've seen a surge from $70.52/kg from the end of 2010 to $75.23/kg in current prices. That's nearly 7% in two weeks. This jump doesn't read as anything alarming, but the average Nolans value over 2009 was $11.17/kg, which shows a jump of 673%. Something is obviously happening here.

But, while the spectre of a massive price increase in these elements looms, I feel it necessary to quell the fears of my tech savvy friends out there who love their gadgets. Rare earths only represent a small fraction of the cost of a finished product in the tech world, thus Steve Jobs and his ilk can continue to sleep soundly on their money covered beds. If anything, the manufacturing costs will not increase sharply, but supply runs could cause longer lineups by the next Black Friday. (more)