Tweet

Control these Rare Earths and you Control the Energy Technology and Economy in the 21st Century

Guest post by: Michael Farrell

Article Overview: Rare Earths are several elements within the periodic table that find their way into the alternative energy industry, our aerospace and defense industry, and our modern high-tech lifestyle … without them, none of those industries or our high-tech standard of living will proceed, explains Mike Farrell with aspenIbiz. China recently attempted to buy the only deposit of rare earths in the USA and a new deposit in Western Australia believed to be the largest rare earth deposit ever found. Read this informative article to understand how these practices and investments are putting the Middle Kingdom in the driver’s seat for the energy technology and economy of the 21st century and why alternative wealth creating strategies should be considered.

Control these Rare Earths and you Control the Energy Technology and Economy in the 21st Century

Without these rare earths, there wouldn't be much of an alternative energy industry ... as there would be no magnets to make the next-generation wind turbines for our wind farms that are required to generate electricity, as well as no batteries for hybrid electric cars that would zip down the freeway.

Without these rare earths, we can say goodbye to space launches and satellites ... as there would be no magnets for miniaturized guidance systems or titanium and ceramics for lightweight rocket engines or nose cones. As such, there would be no weather satellites, and weather monitoring and forecasting would decline, and there will be no navigation systems in our cars because there would be no GPS (global positioning system).

Without these rare earths, our modern high-tech lifestyle will disappear as there will be no TV screens, no iPods, no cell phones, no digital cameras, and no ultra scan as you will have no medical imaging devices.

Demand for these valuable and most critical rare earth metals on the face on the planet is soaring yet supply is not. So why is demand increasing and supply not soaring thereby creating an imbalance and alternative investment opportunities?

Steve Forbes likes to say "with more financial education,the resulting financial literacy and empowerment, will open our eyes to alternative investment opportunities and this will be the key to a recovery from the financial crisis."

In that spirit, I am going to use this article to briefly introduce the rare earths, provide some examples of why they are key to the energy technology and economy with the 21st century, and highlight the drama being played out on the high seas which is a future supply-demand imbalance with key players in Denver, Mt Weld, WA (Western Australia), and The Middle Kingdom.

Why the Middle Kingdom? China's national leaders study these elements and know that without these elements much of the modern economy will just plain shut down so they are trying to control and limit supply (more on this in a minute).

The rare earths are 15 elements in the periodic table called lanthanides. As depicted in the opening paragraphs, we are hooked on these rare earths for our modern lifestyle and the energy economy of the 21st century, as much as we are addicted to oil.

These elements are rare because while these are found on the earth's surface, you have to find deposits that are significant in size in order to justify the economics of mining, milling, and processing.

However, the only people that study these elements are MS / PhD level chemists, and solid-state physicists, and of course national leaders in places like China.

Deng Xiaoping ruler of China in 1980s/1990s said "while there is oil in the Middle East, there is rare earth in China." In 1999, the leader of China was Jiang Zemin and after a visit to the "rare earth" region of Mongolia, he declared a national goal to achieve "economic superiority" by leveraging China's large resources of rare earths. They are building industrial cities in the Mongolian mineral district called the "mother lode" of rare earths with over 15,000 PhD level scientists and engineers dedicated to work in the world's most modern rare earth facilities ... the West has nothing remotely similar.

So, as China is developing their middle class, they're consuming more, exporting less, and trying to control the market with acquisitions and trade practices. For example, if you want to have use of these minerals from China, or Chinese owned mines elsewhere in the world, then you must move your manufacturing facilities to China ... which of course provides jobs for their emerging middle class. Presently, China produces 95% of the world's supply of rare earths.

Now, here is where the situation gets interesting.

The USA has one mine that contains the world's highest grade rare earths ore located at Mountain Pass, CA that is east of San Bernardino and Palm Springs ... still in California but almost to the Nevada and Arizona border. It is owned by MolyCorp based in Denver.

Previously, Molycorp was owned by Unocal (Union Oil of California) and in 2005, the Chinese tried to buy Unocal ... while the Chinese said they wanted access to oil, many believe that reason was a smoke screen, as the Chinese really wanted to get access to the USAs only rare earth deposit located in California.

There are no processing facilities in the USA so all the iron ore must be crushed into powder sent overseas for final manufacturing into material for magnets, batteries, lightweight steel, ceramics, and so forth.

Also, these metals are very toxic and have environmentalists hovering around threatening action to shut down mining operations.

Now for the third leg of this 3 legged stool.

In Australia there is a company called Lynas Corp, based in Sydney that controls what is believed to be one of the largest rare earth deposits ever discovered on this planet, in Mt Weld of Western Australia.

Recently, China made an offer to purchase Lynas Corp. A few days later, the Foreign Investment Review Board of Australia, while late to the party, issued a ruling that would not allow majority ownership of Australian resource firms by companies or governments outside of Australia, as these rare earth resources have been declared strategic assets.

China's monopolistic practices (dropping prices to effectively shut-down new start-ups), its attempts to purchase and therefore limit supply, and its lax rules on environmental safety, are putting the Middle Kingdom in the driver seat for 21st century energy technology ... creating another example of shift of wealth and power from the west to the East (see my recent article on one of the 5Es of the "5E-Valuation framework") and setting the stage for more drama on the high seas, so to speak.

I trust this informative article has introduced you to the importance of rare earths to the energy technology and economy of the 21st century. For the past 200 years, the West has been able to industrialize and grow based on an abundance of energy and resources. As we enter an era of scarcity, we must increase our education, improve our literacy, and monitor and pursue alternative wealth creating opportunities as a way out of this economic crisis.

In previous articles, I wrote that many of us are evaluating alternative wealth creating strategies outside of the US Dollar ... outside of dollar-denominated assets ... perhaps emerging markets ... perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants ... perhaps precious metals, water rights, oil, natural gas, potash mines, or gold mines ... things hard to build, difficult to replace, and costly to substitute ... definitely not financial stocks, definitely not retail stocks, definitely not commercial property.

Thisarticle provides a little more insight as to why emerging markets with a demand for things that are in short supply (such as oil, food, water, precious metals, rare earths, and potash mines) represent alternative wealth creating strategies.

In addition, a good book to read would be "Global Paradox" by John Naisbitt where he provides some insight and clues to the likely winners and losers in the global marketplace as new rules for the world economy emerge that will determine standards of political and business behavior from Tokyo to New York to Sydney to Shanghai.

I will continue to monitor developments in rare earths and the worldwide resource marketplace and report on alternative wealth creating strategies in future articles and updates at my blog.

Related Articles
  Population Perspectives
  Sales 2.0 - Answer to Our Prayers or Costly Distraction?
  Manage or Coach
  New Age Management
  Why Is the Chief People Officer Missing from the C-Suite?
  Input and Output
  The Way of the Guerrilla
  Make This Economy Work For You
  21st Century / AIG Insurance Company - Car Insurance Coverage
  Why Internet Marketing is Key To Recession Survival,
  Selling in 21st Century
  What Are You Waiting For?
  Web Templates for Web Designing
  How To Avoid Discouragement in Sales
  Increase Sales By Dropping the Excuses, Now!
  5 Secrets to Control Information Overload Before it Controls You
  Developing Outstanding Employees
  The Heroes Control Their Business
  Sorting out
  How Independent Retailers Can Survive In The 21st Century

Article Tags: Alternative Wealth Creating Strategies, Financial Education, Hybrid Electric Cars, Internet Marketing, Lynas, Mike Farrell aspenIbiz, Molycorp, Rare Earths, Wind Farms



Related Forum Posts
Seek Venture Capital & Funding - Hello, Greetings from India. I am Seeking Venture Capital for Offshore Software Company Start-up. Need advise along with Business Model Sample. I have a basic outline for an offshore company. 1. Technology - like Microsoft Dot Net, Java, LAMP 2. Talent Team - Found Good Technology Developers. 3. Where I can get the leads/potential customers - Leads have been identified who are willing to move forward offshore projects. 4. I do not have resources like funding. It is a very critical factor to me Industries: Manufacturing, Real Estate, Retail, Insurance, Distribution & Logistics, Healthcare, Industry Associations and Software Product Development, Agricultural Industries and Etc. Services: Offshore Software Development Company. Offices to be located: Hyderabad, Andhra Pradesh, India and USA. Products/Services/Applications in areas like POS & Billing, Sales & Distribution, Production Planning, Material Management, Inventory Control, Plant Maintenance, Purchasing, Accounting and Logistics. Dynamic Web Programming with Database Driven Content Management Systems, Online Stores for E-Commerce, B2B Solutions, Community Portals, Website Redesign and Development, Custom ERP with Enterprise Wide Functional Modules such as Marketing, CRM, Accounting, Inventory Control, Sales & Distribution, Production Planning, Purchase & Stores, Logistics and Supply Chain. Seek your further questions and help. Thank you, Best Regards, Jayapratap.
Re: New Guy Here - Automobile Industry - Hi Ray, Welcome to the forum. If you use a website to promote your business, please add it to your signature file (via the User Control Panel) so that we can check it out. Best wishes, David H
Re: Hello, I'm brand new - You need to go to your User Control Panel /Profile/Edit Avatar where you will be able to put a pic or avatar of your choice. Hope this helps, any problems let us know, take care, Carol
Re: Suspicious/Problematic Users - Well spotted Trent, we must have seen this joker at the same time. I have just sent off a p.m to GT as well under the heading "Pest Control" Mal.
New profile options - Hello entrepreneurs! I've discovered a new feature that phpbb3 offers - we can create custom fields in our profiles. If you go to the User Control Panel, then click on Profile you'll see the options at the bottom to add in your favorite business book and favorite entrepreneur. Then on all of your posts your profile settings show up. You can see my answers to the right of this post. Are there any other categories that we should add as optional fields? What would you like to learn about your fellow members?


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Build Corporate Credit for Your Small Business

Top 5 Qualities in an Outsourcing Company

Is the Media to blame for losses in super?

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.