A Critical Year in Review: What's Next?

China's export quotas triggered the investment rush for rare earth elements (REEs). John Kaiser of Kaiser Research Online summarized the first chapter of the REE story in his no-nonsense April 24 interview, "Rare Earth Juniors Have a Five-Year Window."

John Kaiser: Historically, REE prices have been very low due to China's abundant resources and its ability to produce them very cheaply. China is aware that it could become the world's biggest polluter when its economy eclipses that of the U.S. China is very concerned about making sure it has the raw materials on hand to assure its clean-energy future. The supply restrictions China introduced a couple of years ago were part of a campaign to clean up and consolidate its high-pollution industries. Those restrictions resulted in spectacularly high REE prices for export and substantially higher prices within China. Since July 2011, the drop in demand and China's inability to control smuggling resulted in a pullback in REE prices. To some degree, I think China wants its monopoly to end. China's ambitions go far beyond squeezing a few profits out of a market it controls. Continue reading "A Critical Year in Review: What's Next?"

Why Copper Is a Critical Metal: Mickey Fulp

The Critical Metals Report: In the past, there has been some confusion about the term "critical metals." What do you consider to be critical metals and why?

Mickey Fulp: Critical metals are the major metals that are used globally in industrial applications and are essential for world economic health. They include iron, aluminum, copper, the various iron alloys, zinc, lead, tin and uranium. These are the real "critical metals," the ones that enable the world's economy to function.

TCMR: So your classification of a critical metal is based on the need and the supply and demand, is that correct?

"Critical metals are the major metals that are used globally in industrial applications and are essential for world economic health."

MF: It's based on the fact that they have major tonnages mined and processed and are essential to industry and world economic health. Critical metals either trade on worldwide markets through spot, futures and options or they trade as bulk dry commodities, as iron ore does. Continue reading "Why Copper Is a Critical Metal: Mickey Fulp"

REE Stocks Are Down but Not Out: Siddharth Rajeev

The Critical Metals Report: Siddharth, despite the poor price performance of critical metals equities since the fall of 2011, most of the prices for the underlying commodities have indicated relatively stable demand. What's your view?

Siddharth Rajeev: It's tough to generalize on the mining sector because each critical element has its own supply and demand drivers. We have a positive outlook on a few elements; this is not so with others. However, it's true that commodity prices have not dropped as much as equities. If you look at industry data, you can see that mining companies are in a much better position now compared to four or five years ago. For example, the margins, return on equity and balance sheets of gold and copper producers have improved significantly over the past five years. Despite that, why is the TSX Venture, 50% of which is comprised of mining companies, down by 60%? I believe that the market is overreacting, just as it did in 2008. Therefore, we believe there is a good opportunity to buy quality assets at this time at cheap valuations. Continue reading "REE Stocks Are Down but Not Out: Siddharth Rajeev"