Rare earth demand rises, no supply increase seen outside China

1st February 2010 By: Jade Davenport - Creamer Media Correspondent

Demand for rare-earth metals was increasing "exponentially", primarily driven by demand for new technology, independent consultant and commentator Jack Lifton said on Monday.

He told delegates attending the 2010 Mining Indaba in Cape Town that 2010 was already shaping up as the year of rare metals.

Rare-earth metals are critical technology metals used in the manufacturing of hybrid cars, super alloys used in the defence industry, cellphones, large wind turbines, missiles and computer monitors.

Lifton said that rare-earth metals were the "newest great interest" amongst investors, primarily the result of growing demand.

The demand for rare-earth metals had resulted in a significant increase in the number of junior miners.

In the last year alone, Lifton stated that more than 100 junior miners have announced over 150 different rare-earth mining plays.

These were just the private ventures that have gone public as initial public offerings, or have changed the direction of their existing listed entity, to take into account rare earth "discoveries" or acquisitions.

Interestingly, Lifton noted that the rising demand had not increased supply.

The probability of an actual supply increase is dependent on at least a dozen variables, none of which had to do with the share price of the junior miner being analysed, he said.

The supply of rare earths during the next decade, could only be maintained and increased by those which were already producing rare earths, or those that had produced them before and could reactivate their mines, or miners that had been developing good properties for many years already.

Significantly, Lifton predicted that there would be no increase in rare-earth metal production outside China. The Asian giant currently accounted for 95% of rare earth-metal production.