Rare Earth Metals – The brief introduction

Rare Earth metals ( REM ) are a group of 17 mineral elements found in the periodic table discovered

between 1787 and 1909, at the time their importance in the progression of future technology could

never have been guessed. Unlike gold, oil or gas, they are not found in large deposits or close to the

earth’s surface, this makes mining Rare Earth Metals hugely expensive. In fact a lot of the time it is

uneconomical for mining to take place, this is one of the reasons that they make such a great

investment opportunity. Up until the start of the 1980’s REMS were mined around the world, with

50% of supply coming from the USA. At the beginning of the 80’s, China had found and begun to

mine its own supply of REMS. As their supply grew, the rest of the world’s mineable supply began to

decline. This led us to the point, at the turn of the millennium where China controlled 95% of the

world’s current supply of REMs. It is this Chinese control of supply over the ever increasing demand

for REM’s that are making them such an attractive, profitable investment opportunity.

Dysprosium (Dy) – Atomic number 66

This is often called the ‘Hard To Get’ REM, due to its name deriving from a Greek word of the same

meaning. Its appearance is a bright metallic silver colour, however it is so soft it can be cut using a

knife. Like most REM’s the full potential of Dysprosium was not really uncovered until the mid 1950’s

and now, this unheard element touches our life in ways you would not imagine.

Dysprosium plays a major part in our electricity production, and our evolution of such technologies.

When nuclear power stations were being developed in the early 1950’s, scientists needed a way to

help cool the vast temperatures that built up in the cores, it was discovered that Dysprosium had an

a nearly unrivalled ability to absorb Neutrons, meaning that when it is placed into the core reactor it

can help regulate temperatures. With the world turning its focus towards greener, renewable energy

sources, it is another one of Dysprosium’s unique properties that makes it a vital element for future

power production. It was discovered that when combined with another REM (Neodymium), together

they could be used to create the world’s most powerful magnets. It is these magnets that make it

possible for huge wind turbines to transform the power of moving air, into useable, green electricity.

These magnets are also a key element in the production of hybrid electric cars, without them the

green electric motors that power them would not be able to be produced. The importance of

Dysprosium within green technology is highlighted not only by our dependence on it, but also the

fact that at present there are no suitable replacements for it.

Dysprosium has also contributed too many other areas of our life. Its magnetic properties are also

used in the manufacturing of computer hard drives, allowing for their decrease in size over the last

decade. Reproduction of sound has also changed massively, down to the introduction of these new

magnets. Due to their power, the magnets on speakers have been able to be reduced in size allowing

the creation of powerful and clear speakers in such things as earphones, mobile phones and car

speakers, these are in addition the speakers inside every mobile phone, tablet, TV and laptop.

Dysprosium - The opinions.

The fact that its uses are far reaching and its availability sparse should be great indicators as to the

rising value of this metal on their own. The following are quotes from key government and industry

official’s outlining just how important REMs are

Jack Lifton – Industry advisor to the US Government - :

‘A real crunch is coming. In America, Britain and elsewhere we have not yet woken up to the fact

that there is an urgent need to secure the supply of rare earths from sources outside China."

And yet virtually no one has heard of this problem! People are familiar with peak oil, global warming,

ocean acidification, the national debt and the depletion of fossil water, but very few are aware of

the looming crisis in rare metals... upon which much of western civilization rests’

US Congressional Report Extract June 2012:

‘While Rare Earth deposits are geographically diverse, current capabilities to process into finished

usable materials are based predominately in China, it is this positioning of processing plant that gives

China the dominant hand in supply and pricing’

US President Obama July 2012:

‘ U.S. Energy future depends on Rare Earth Metals…we’ve got to take control of our energy future

and we cannot let that energy industry take root in another country. We want our companies

building those products right here in America. But to do that, American companies need to have

access to Rare Earth Metals which China supply’

Backing up President Obama’s above quote, if the below chart taken from the US Dept of Energy, is

shows just how much the US Government see Dysprosium as a key element for future green energy.

*Source US Dept of Energy: Critical Materials Strategy

Automotive Case study of future demand vs supply:

We have shown you its uses, the opinions of governments and world leaders, but now let us show

you just one example of why the price of Dysprosium will rocket based on simple supply / demand.

The current yearly production is 1400 tons

Each hybrid car built requires 150g for Dysprosium

That’s 6666 cars for every ton, giving us an annual total global production capacity of 9.3 million

cars.

IMS Research* have forecast global production for Hybrids will reach 16 million by 2020, this would

leave a Dysprosium shortfall of 1155 tons, nearly double the total current supply.

This is without the demands from the other industries that Dysprosium plays a pivotal part in.

*IMS Research are global leaders in market research and consultancy to the automotive electronics industry.

Future Demand Increases:

Consumer Electronics Association forecast market for home audio speakers to grow 20-30%

year on year for next five years

The growth of the overall consumer electronic market is to be 7% year on year -without

taking into account the predicted massive growth in Chinese and Indian markets

The International Energy Agency predict that global spend on wind turbine growth will

average $81 Billion every year until 2050.

Future Supply Concerns:

In 2010 China cut export quotas by 39%, this was then dropped by a further 43% in the first

quarter of 2012.

Molycorp (ones of the world’s biggest REM mining companies) has predicted that China will

be importing not exporting Rare Earth Metals by 2015.

In 2011 the US government was recommended by American Security Project that stock

piling key REM such as dysprosium was the only short term solution to the Chinese supply

restrictions.

Global industry giants such as Mitsubishi are already stock piling Dysprosium.

One of the world’s leading information suppliers on metals – Asian Metal, has forecast the

following demand for Dysprosium over the next 4 years. Keeping in mind current yearly

production is 1400, we are all ready in deficit based on forecasts. Making current available

stock even more valuable.

2012 2014 2016

1600 2300 3000 (tons per annum)

Historical Financial Performance of Dysprosium.

Future investment based on global supply and demand issues clearly show that the Dysprosium has

an upward future trend, this has also been the case historically. The following graph shows the

performance of Dysprosium against other investment commodities over the last four years and the

current value of your investment if you had invested £2500 in 2008

*All figures sourced from Bloomberg

Time To Buy:

REMs are the investment platform for the future. The hard evidence and facts from governments,

senior analysts and global financial institutes, point to the fact that Dysprosium is one of the REMs to

focus on. As the world starts to forecast its consumption for Dysprosium and its supply becomes a

global concern the price is going to start a huge upward trend. London Metal Group cannot stress

any greater, that the time to get involved with Dysprosium is now. To compound the evidence

further, at the time of writing this report, Ford Motor Company announced they predict the price of

Dysprosium to increase by up to 2700% over the next 25 years. The ball of momentum around

Dysprosium has started to gather pace, and the time to get in on this opportunity is now….

As a US Federal Reserve analyst was quoted in saying:

‘Like in the 1970s where people become millionaires in oil stocks, the rare earth metals stocks are

also promising. Being a scarce, tangible product they will outperform the recent Dot Com boom,

they will have longevity and will only get stronger. People will make a lot of money from this

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FTSE Gold Silver Brent Crude US Dollar $ Dysprosium

£2,425 £4,275 £3,900 £3,175 £2,750 £7,325