Appreciating Your Assets

People are often too busy minding their own business to see how they are affected by the mining business. The earth provides for all our needs – but sometimes we need to dig for what we want. MANY things come from China. Many people interested in and/or concerned about money are aware that China mines gold and silver (both from the ground and out of e-waste. Many people interested in and/or concerned about energy and the environment are aware that China mines coal. Not many people think about other things that China mines – that may be of even more significance. Much of what we think of as western civilization now depends on rare metals that most people probably have never even heard of – like dysprosium and neodymium (used in motor magnets), terbium (used in electric lights), lanthanum (used for hydrogen storage), praseodymium (used in lasers and ceramic materials), gadolinium (used to manufacture computer memory), erbium (used in the manufacture of vanadium steel), and ytterbium (used to make infrared lasers).

At least PART of almost everything people (in the United States) buy probably either was produced, was added, or was assembled in China. It sometimes seems like the “American Dream”, “lifestyle”, and “standard of living” now all depend upon (“free trade” with) China. Many industries (around the world) depend upon 17 “Rare Earth Elements” (or REEs) – that are primarily mined in China. It now appears that China is preparing to stop exporting and sharing its REEs with the rest of the world by 2012 – which will affect the manufacturing and availability of many things, including automobiles, military weapons, and “green” technologies like wind turbines, low-energy light bulbs, and hybrid car batteries. Manufacturing of everything from computers, iPods, and iPhones to farm machinery and fiber optics could grind to a halt. Electronics might disappear from the shelves and prices for manufactured goods that depend on these metals could skyrocket.

In the same way that silver is appreciating in price due to its pervasive industrial use and diminishing supply, 17 Rare Earth Elements – all of which are also increasingly precious, but non-monetary, metals – are strategic resources upon which entire nations are built. In many ways, these metals are similar to rubber – a resource so valuable and important to the world that many experts call it the “fourth most important natural resource in the world,” right after water, steel, and oil. Rubber is like plastic – it is used in almost everything. Like with steel or oil, without rubber, you couldn’t drive your car to work or water your lawn, many medical technologies would cease to work, and virtually all commercial construction would grind to a halt.

Many strategic battles have been fought (with steel) in the past over control of water, oil, rubber, and other needed resources (including women). A global shortage of REEs could create new conflict and/or hardship in the most (technologically) “developed” countries and economies of the world. The (literally) “dirty little secret” of “green” technologies (like wind turbines, solar panels, hybrid car batteries, and fiber optics) is that to manufacture them, rare metals need to be mined out of incredibly ecologically destructive operations (in China).

Many people have heard of issues like peak oil, global warming, ocean acidification, the national debt, and the depletion of fossil water, but very few are aware of the looming crisis in rare metals – without which we would have no fiber optic cables, X-ray machines, car stereos, high-tech missile guidance systems, or electric motors.

The demand for REEs has skyrocketed over the last decade from 40,000 tons to 120,000 tons. Meanwhile, China has been cutting its exports. China now only exports about 30,000 tons a year, which is about only one-fourth of the demand the world needs. In order to build more “green” technologies, the world is predicted to need 200,000 tons of rare earth elements by 2014. Yet China now threatens to drop exports to exactly zero tons by 2012. Without China’s exports, the western world will quickly run out of many (needed) Elements.

China isn’t the only place on earth where these rare metals are found, but constructing mines to pull these earth elements out of the ground takes many years. Some mines are under construction right now in other countries that could help fill the demand for REEs, but it’ll take five to ten years before any of them are operational (2015 – 2020 at the earliest). Meanwhile, China is considering cutting off its supply by 2012.

Unless scientists find less-rare alternatives to many of these metals, there will be 3-7 year gap (between 2012 and 2020) in which there will be in disastrously short supply. Along with gold and silver, prices for other rare metals will almost certainly skyrocket over the next 2 – 5 years. A huge investment opportunity exists for people willing to take a risk and bet their money on rising prices of these rare earth elements. Another big investment opportunity is in recycling. As prices leap higher, it will become more economically feasible (and potentially profitable) to harvest valuable metals out of garbage dumps and landfills where people are discarding electronics such as motors, computers, sound systems, and other such items.

Future fortunes might be made by setting up and operating rare earth element reclamation operations of some kind. Like plastic, which is not recycled nearly enough, metals aren’t destroyed when they’re thrown away. They sit around in the trash for eons, just waiting to be reclaimed and re-used. Around 85% of all the lead used in the United States today is reclaimed out of lead-acid batteries and other similar devices. Similar programs for rare metals could go a long way towards meeting society’s demand for rare elements without having to keep mining them out of the ground.

While they may never be used to make coins or (fractionally) “back” (paper) currency, your financial future and standard of living could very well depend upon what happens with metals you may not have previously have ever heard of. Depending upon what China does and if, when, and how other countries respond, 2012 could bring major “earth changes” that the Mayan calendar never considered. The time to act is NOW – starting with leaving a comment below!

© 2010, Oren Pardes. All rights reserved.

Tags: China, elements, Investing, metals, mining, opportunities, recycling, Scarcity

This entry was posted on Tuesday, January 26th, 2010 at 12:16 am and is filed under Environment, Income, Scarcity, Wars. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.