From rare earth site about rare earth metal's.
How and Why to Invest in Rare Earth Metals
(Jan.19,2006)
In 2002, the United States imported 54% of its needs of rare earth metals. In 2003, that figure rose to 100% and has remained there since. What happened?
The two U.S. producers of rare earth metal concentrates were shut down after a private group, which had gotten in 2001-2002 a donation of more than $5 million from a Chinese supporter, raised environmental concerns. Within two years, the Chinese were producing nearly 100% of the world supply of cerium and lanthanum, rare earth metals (rems).
Of rare earth metals (rems) mined and refined each year, 46% (mainly cerium and lanthanum) are used to produce automotive emissions controls, mostly catalytic converters. The bulk of the rest of the rems produced are used to make permanent magnets mostly used in high efficiency and miniaturized electric motors. Rems have more than 40 applications in a typical automobile and in the manufacture of specialty high current density long life rechargeable batteries - such as nickel metal hydride types the major use of which is in hybrid vehicles.
As of now, in 2005, no American manufacturer can produce a catalytic converter, a miniature electric motor, a high-density magnet, a nickel metal hydride battery or a hybrid vehicle without materials supplied by the People's Republic of China (PRC).To be more specific, none of these products can be produced without the agreement of Bao Steel to sell the American, manufacturer of the rare earth metals necessary. In the PRC it is Bao Steel that has cornered the mining, refining and manufacturing of the rare earth metals.
How does one invest in Bao Steel? One way is to buy and trade its shares on the Hong Kong Stock Exchange. Another way is to buy General Motors [NYSE:GM; TSX:GM] shares. GM has an arrangement to build hybrid vehicles in China, so that it will have access to Bao Steel as a supplier, for the moment, just of rare earth metals - GM does not today buy steel from Bao. These GM hybrid vehicles are for not only the export but also the domestic market. Bao or a partner of Bao will undoubtedly also acquire the technology from GM to produce hybrid vehicles on their own.
Investors could also choose any of the other car companies going forward with hybrid vehicle programs, but none of them except perhaps Toyota [NYSE:TM] has a deep connection to Bao Steel. Without that connection their efforts will fail. Ford [NYSE:F], in particular, is completely out of its supply chain depth and will fail in its hybrid program for that reason and for its noncompetence in hybrid engineering as well.
(From ResourceInvestor)
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