By Cyrus S Darabshaw Exclusive To Rare Earth Investing News

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We have been reporting on how the world is waking up to the fact that something needs to be done of China’s strangle-hold on approximately 96 per cent of the global rare earths supply. Last week, we had spoken of the European Commission’s study on “access difficulties” in the extraction of REE. This week, we bring to you an interesting aside on how the United States may have found a way to counter China.

The report in techeye.net, says the US may just have found an alternate in the form of laser. The report says the country has made a “major breakthrough in laser fusion technology, which could help the mega power combat China’s future energy dominance with its rare earth metals.”

Following recent experiments from the National Ignition Facility, it is hoped that using laser fusion technology, it may be possible to control the fusion of atoms which would create similar conditions to those found in the Earth’s Sun. A team led by scientist Siegfried Glenzer carried out the experiment. While nuclear power works by splitting atoms, the idea in this test was to use laser to fuse atoms together and create an ‘ignite’ type reaction.

The recent test focused on igniting a tiny cylinder of gold called a hohlraum. Glenzer’s team managed to ignite it and raise 669 kiloJoules of energy, far more than any previous tests. The report, quoting from Glenzer’s interview with the BBC News, says if a steady stream of power can be maintained, it could boil the contents of over 50 Olympic-sized swimming pools in just one second! The results are significant, according to Dr Glenzer, because his team has discovered that plasma didn’t reduce the hohlraum’s ability to absorb the laser light.

Coming back to rare earths, though, at the risk of sounding repetitive, we must point out that we were among the first to say that 2010 was going to be a good year for rare earths investors. Our optimism was shared by many analysts. We reproduce here extracts from an interview with Equities and Economics Report writer Victor Gonçalves by The Gold Report.

Goncalves, who believes in Keynesian Economics, has said that REE are going to be a “huge phenomenon.” In his words, it is like 2007 when there was a uranium boom and uranium went from $8 to $136. He further states that tantalum and niobium are being used in a lot of other things besides eco-friendly cars and these rare earths are going to be in huge demand.

In reply to another question, Goncalves says there is just not enough to supply the markets fast enough. That was one factor driving the price up. Added to that was the supply constraint out of China. So, he says, both these factors are obviously causing major upswing in the price of rare earths. Besides, demand in the automobile industry for REE would be the third contributory factor in keeping the price high.

After the report at the start of the year in London’s Daily Mail that sparked it all, it is now the turn of The Independent and the Financial Times to underline concerns around the supply of REE vis-a-vis the Chinese. The report by Cahal Milmo in The Independent states that Britain and other Western countries risk running out of supplies of certain highly sought-after rare metals that are vital to a host of green technologies, amid growing evidence that China, which has a monopoly on global production, is set to choke off exports of valuable compounds.

China is trying to ensure that all raw REE materials are processed within its borders. During the past seven years it has reduced by 40 per cent the amount of rare earths available for export.

Quoting industry sources, The Independent further says that China could halt shipments of at least two metals as early as next year, and that by 2012 it is likely to be producing only enough REE ore to satisfy its own booming domestic demand, creating a potential crisis as Western countries rush to find alternative supplies, and companies open new mines in locations from South Africa to Greenland to satisfy international demand.

Quoting Jack Lifton, an independent consultant and a world expert on REEs, the report expressed fears that a crunch was coming soon. Yet, in America, Britain and elsewhere, nobody had woken up to the fact that there was an urgent need to secure the supply of rare earths from sources outside China, it added. China has gone from exporting 75 per cent of the raw ore it produces to shipping just 25 per cent, and it does not consider itself to be under any obligation to ensure supplies of rare earths to anyone but itself.

There has been an effort in the West to set up new mines but these are five to 10 years away from significant production, even as global demand has tripled from 40,000 tonnes to 120,000 tonnes over the past 10 years, during which time China has steadily cut annual exports from 48,500 tonnes to 31,310 tonnes.

Worldwide, the industries reliant on REEs, which produce anything from fibre-optic cables to missile guidance systems, are estimated to be worth £3 trillion, or 5 per cent of global GDP.

Well, all that we can say to such news reports is: We were among the handful of first guys to have told you so.

If you were to ask us, things are picking up though. Slowly but surely, awareness is creeping into the collective minds of the Europeans and North Americans that something will have to be done, and soon.

So, companies have already started making moves to open or re-open mines in Canada, South Africa and Greenland. Not only that, but a nation in China’s neighbourhood, Korea, an electronics giant, too, has joined this group. The Korea Institute of Industrial Technology (KITECH), according to reports, will begin developing rare metals for industrial use at a new government-funded research and technology center, which opened Thursday.

Researchers will identify, explore and develop key rare materials that can be used by local businesses, the institute said. “It is critical that we secure rare metals as they are essential for the nation’s high-tech and green industries,” said KITECH President Na Kyoung-hoan.

South Korea currently relies heavily on imports for its rare metal needs with 2008 imports totaling $12.5 billion, up from $4.2 billion in 2003, according to government data.

Company news

It looks like there could be one company that could make a sizeable dent in the Chinese supply of REE. Last week, the rare earths space was sizzling with news relating to the pre-feasibility study of the Kvanefjeld project of the West Perth-based Greenland Minerals and Energy. What is exciting about this project is that the company, in a statement, has said that the project could rival the world’s largest rare earths mine in China after a prefeasibility study estimated capital costs at $US 2.3 billion ($A2.6 billion).

Results of a study have indicated that the proposed output at Kvanefjeld of 43,729 tonnes of rare earths each year could challenge that of China’s Bayan Ebo mine, which produces about 40 per cent of current world production. Greenland managing director Roderick Mcillree said China had indicated its desire to cease the export of certain rare earths, therefore boosting Kvanefjeld’s role in alleviating any shortfall. The study estimated a project life of 23 years with a processing rate of 10.8 million tonnes that will also produce 3,895t of uranium oxide.

Kvanefjeld has a resource estimate of 4.9 mt of rare earth oxides and 120,000t of uranium oxide. Construction is anticipated to begin in 2013 and first production is scheduled for 2015.

Greenland holds 61 per cent of the Kvanefjeld, and has options to move to 90 per cent and then 100 per cent ownership through two payments of $A10 million and $50 million respectively.

Globex Mining Enterprises Inc (TSX: GMX) has announced its assay results from surface grab sampling of outcrops and possibly large boulders for rare earth elements on its 100-per-cent owned Turner Falls property in Villedieu Township, Quebec approximately 45 kilometres east of Kipawa.

Fifteen rock samples were analysed for, among other things, trace elements including rare earths. Many of the assays are anomalous and two are very anomalous in Heavy and Light Rare Earths and Yttrium. When evaluating rare earth assays, the higher the ratio of heavy rare earth oxides to the total rare earth oxide content, the better the potential of the prospect.

The ratios of the two samples indicated positive exploration potential. In addition, the two samples assayed 5.62 per cent and 4.09 per cent Zirconium Oxide (ZrO2) respectively and the first sample contained 1.15 per cent Niobium Oxide (Nb2O5).

The Turner Falls area was prospected in the 1950s and a showing of rare earths, niobium oxide and uranium was discovered in Grenville rocks. The Turner Falls Property is part of the over 20,000 hectare Hunter’s Point Property where a number of showings of uranium and gold have produced assays of up to 7.7 per cent U3O8 and 1.1 oz/ton gold. In addition, recent work has located showings of anomalous and high grade rare earth values on the property in areas other than the Turner Falls showing.

Northern Uranium (ASX: NTU) has followed up December discoveries of significant rare earth elements targets at its 100-per-cent-owned Gardiner-Tanami project, with news of high concentration of heavy rare earth elements (HREE) in the mineralisation.

NTU identified unusually high concentrations of HREE in hydrothermal quartz-xenotime mineralisation in the Browns Range Dome area at Gardiner-Tanami. NTU has targeted rare earths exploration as a significant focus in 2010 at at the Gardiner-Tanami project, bordering the Northern Territory and Western Australia, in tandem with the company’s core uranium project.

The company’s HREE discovery represents an interesting value-adding component for NTU investors and shareholders.

Executive Chairman Kevin Schultz said that a further study of the HREE bearing mineralisation at the company’s tenements showed that at current REE prices, it has extremely high in-ground value.

NTU will proceed with the HREE exploration program, in conjunction with the 2010 uranium exploration programm including review and re-processing of airborne mapping data and airborne radiometrics.

Northern Uranium is an Australian based company exploring for uranium in Western Australia and the Northern Territory.

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