REMs offer enormous potential for investorsApArt from being sources of green energy, what do wind turbines, solar panels, hybrid cars and new highly efficient light bulbs have in common?

Simply put: rare Earth Metals (rEMs). rEMs are 17 naturally occurring elements. Five of

these — dysprosium, terbium, europium, neodymium and yttrium — are used in the manufacturing process of almost every type of green energy source.

Neodymium magnets can be found in wind turbine gearboxes, and dysprosium magnets are key parts of powerful hybrid cars, to name just two examples.

In short, without rEMs our efforts to switch to green energy would be futile. But rEMs powering the green revolution is merely the tip of the iceberg. Everyday, each of us will come into contact with something that has only been made possible by rEMs.

The list is vast: LED tVs, microwaves, camera lenses, smartphones, electronic tablets, medical equipment...

Why are REMs such a good investment?The simple answer: supply. Experts agree global demand for rEMs is set to soar in the next five-10 years.

Worldwide, exponential sales growth is forecast for consumer electronics, hybrid cars and electronic vehicles — all of which rely on rEMs for production.

Demand for rEMs is further enhanced by the looming deadlines many nations have agreed to lower their carbon emissions by, as they move to greener sources of energy production, such as wind and solar — technologies heavily reliant on rEMs. These governmental pledges were further endorsed by a swathe of new commitments made at last month’s United Nations Conference on Sustainable Development in Brazil (rio+20).

In January 2012, the US Energy Department warned limited supplies of the five rEMs used in green technologies would pose a threat to production by 2015.

David Sandalow, assistant secretary for policy and international affairs at the Department, said: “Demand for rare-earth materials has grown more rapidly than that for commodity metals such as steel.”

A unique phenomenon is occurring in the rEM industry that experts have described as the ‘perfect storm’ for business. While rEM demand increases, uncertainty about the industry’s ability to keep up with supply continues to make headlines.

China currently controls over 95% of the world’s supply of rEMs but has been restricting export quotas. In July 2010 it reduced these quotas by 40%.

In March, the US, EU and Japan asked the World trade Organization for a review of China’s policies, accusing it of attempting to give its own high-tech industries a competitive edge over the rest of the world.

Although China only has about 40%of global estimated rEM deposits, and there are several projects worldwide underway to extract the ore, it seems unlikely the production will be able to satisfy current demands any time soon. In fact, China itself could become a net importer of rEMs by 2014, according to Mark Smith, CEO of Colorado-based rEMs mining company Molycorp. reports this month suggested that China had begun buying and stockpiling rEMs, taking advantage of current low prices.

Experts believe rEM shortages are likely in the coming years, The Daily Telegraph recently reported.

It also quoted pricewaterhouseCoopers as likening the rEM supply situation to a ‘ticking timebomb’.

In a recent Critical Metals report, rEM expert Jack Lifton said “The critical rEEs (rEMs) will maintain strong demand and associated pricing.”

Certain rEMS have offered staggering returns of as much as 2,700%* over the past four years.

London Metal Group offer access to 16 out of the 17 rare earth elements.

_ Visit www.londonmetalgroup.com or call 0800 472 5452 for your free investment guide

*Yttrium 5 year performance against gold and silver

(*)Source: Bloomberg

*Yttrium 4 month performance against Blue chips such as Barclays, Telefonica and BHP Billiton

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