Jan 4 2011
Quantum Rare Earth Developments Corp. (TSX VENTURE:QRE)(PINK SHEETS:QREDF)(FRANKFURT:BR3) ("Quantum", the "Company") announced today that rare earth deposits currently being developed in the United States and Canada carry the potential to prevent future shortfalls of these important materials now that China is limiting its exports of the elements.
"While China's recent decision to cut its exports threatens high-tech industries, rare earth mining companies in the Americas and Australia will be able to fill the gap," predicts Peter Dickie, President and CEO of Quantum Rare Earth Developments.
Rare earth metals are relatively obscure elements that are essential for many high-tech products, such as smartphones, electric cars, many computers, and a range of military hardware. Neodymium and dysprosium, for instance, are needed to make top-performing magnets in electric motors and generators. Another element, yttrium, is a key ingredient in fluorescent light bulbs and flat screen TVs. So many products depend upon rare earth materials that a recent Department of Energy report warned that the American economy is vulnerable to shortages of these elements: http://www.energy.gov/news/documents/criticalmaterialsstrategy.pdf. "Without rare earth elements, some of the most innovative industries in the world would be crippled," says Dickie.
The problem is that one country—China—has a virtual monopoly on rare earth elements. More than 95% of all the rare earth materials used today come from Chinese mines. "People know that American is dependent on imported oil," Dickie observes. "What they may not know is that America is far more dependent on imported rare earth elements." That dependence worries top U.S. government officials. "The availability of a number of these materials is at risk due to their location, vulnerability to supply disruptions and lack of suitable substitutes," says the Dept of Energy report.
In the past, China has exported enough rare earth elements to meet the demand. But on December 28, 2011, the Chinese government sent shock waves around the world by announcing that it would slash exports of rare earths by 35% for the first half of 2011, compared to the same period last year. http://www.forbes.com/feeds/ap/2010/12/28/general-as-china-rare-earths_8226081.html. China's action drew a swift response from the U.S. government officials. "We are very concerned about China's export restraints on rare earth minerals," a spokeswoman for the office of the United States Trade Representative, Nefeterius Akeli McPherson, told the New York Times. http://www.nytimes.com/2010/12/29/business/global/29rare.html?_r=1&scp=2&sq=Rare%20earth&st=cse
But while the move threatens high tech industries, it's a boon to mining companies outside of China, explains Quantum CEO Peter Dickie. Indeed, industry analysts say not only that existing mines in U.S., Canada, and Australia are now more valuable, but also that more mines will be opened in the next few years. Investors quickly saw the potential. In the days following China's announcement, investors bid up the stocks of non-Chinese rare earth mining companies such as Molycorp (NYSE: MCP), Rare Element Resources (AMEX: REE) and Quantum (TSX.V – QRE, FSE – BR3). "It's only a matter of time before China is not the major supplier to the rest of the world," says Dickie. That future diversity of supply will be good for the industries that depend on rare earths—and for the companies that produce the elements, he says.
Source: http://www.quantumrareearth.com/