Strategic Metals, REEs & China.

RareMetalBlogChina has imposed export restraints on raw materials including rare earths, tungsten and molybdenum, causing worldwide supplies to plummet, sending prices higher and threatening strategic stockpiles. China is the largest supplier of 28 of the 52 elements on the [British] Geological Survey’s risk list.

China’s hold over critical metals is under threat this morning, as Wolf Minerals is reopening a UK tungsten mine in an effort to break China’s near monopoly on tungsten supply. “Wolf is backed by Resource Capital Funds, which holds a 17 percent stake, and Traxys SA, with 9.6 percent, data compiled by Bloomberg show. Resource Capital is the largest shareholder in Molycorp Inc. (MCP), owner of the biggest U.S. rare-earth deposit. Traxys, the Luxembourg-based metals trader, also owns a stake in Molycorp.”  Is this the “invisible hand” of capitalism at work?

Is it just me that senses an industry change underway, as  the west has finally woken up to the danger of modern China needing more and more of its critical metal supply for its own economy? Will the Rare Earth Element sector be next? Are parties of interest already researching western REE firms especially the heavies? My guess is yes, and that 2012 will see some of the REE sector start to get fast tracked. But which firm is the next Wolf?

England Challenges China by Reviving Strategic Mine: Commodities
By Thomas Biesheuvel – Apr 4, 2012
An English mine last used to make armaments to defeat Hitler’s forces will be revived to challenge China’s grip on tungsten, among strategic metals at the heart of a deepening trade dispute with Europe and the U.S.

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Wolf Minerals Ltd. (WLF) is developing a tungsten mine in Devon, southwest England, 70 years after it was last extracted there. The Hemerdon site is the world’s fourth-largest deposit and can produce about 3.5 percent of global demand for the metal, used to harden steel in ballistic missiles and in drill bits. China provides about 85 percent of worldwide supplies.

Tungsten was one of the metals cited when U.S. President Barack Obama filed a complaint to the World Trade Organization on March 13 against Chinese supply curbs. Tungsten is a “critical” raw material, according to the European Union, and the British Geological Survey places it at the top of its supply-risk list of materials needed to maintain the U.K.’s economy and lifestyle.

“A big element of what we are doing is providing a strategic supply to companies outside of China,” Wolf Managing Director Humphrey Hale said in an interview in London. “We’re answering a requirement from the market, which is strategic supply, and prices are at a position where we can make money from that.”

Wolf is backed by Resource Capital Funds, which holds a 17 percent stake, and Traxys SA, with 9.6 percent, data compiled by Bloomberg show. Resource Capital is the largest shareholder in Molycorp Inc. (MCP), owner of the biggest U.S. rare-earth deposit. Traxys, the Luxembourg-based metals trader, also owns a stake in Molycorp.
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The more I follow developments in the REE sector and cutting edge developments emerging from the global labs in graphene research, the more I am convinced that we are on the cusp of a new 21st century industrial revolution. A revolution that will lead us out of our mired western stagnant economies and into the next boom, mid-decade onwards. The REE sector will be a very important part of that new industrial revolution.

The rich…are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society…"

Adam Smith. The Theory of Moral Sentiments.


  1. Sobering article.
    Excellent topic.
    28 out of 52 critical elements controlled largely by China.
    Are we in “peace-time”?
    Curious issue: “An English mine last used to make armaments to defeat Hitler’s forces will be revived to challenge China’s grip on tungsten, among strategic metals at the heart of a deepening trade dispute with Europe and the U.S.”
    Why are ROW countries awakening to the need to provide alternative sources of “critical metals”?
    Is there a bigger story on the horizon beyond the 2010 Chinese/Japanese “fishing boat” issue?
    Like the source or not? Wikileaks disclosure of “secret documents” shows a more sinister and threatening side to foreign affairs between China and ROW.
    What happens if real war breaks out? Not the ongoing Chinese “surrogates” Iran, North Korea, etc. vs. ROW, but a breakdown in Chinese:ROW relations?
    Exactly why a tungsten mine not used since “Hitler” is being reactivated?
    Tungsten’s hardness and high density give it military applications in penetrating projectiles. Now that is a practical way in war-time for tungsten?
    Uncertain economic and political times are upon us. What to do.
    Once again RMB is leading the way; thank you Mr Graeme Irvine.
    Pulitzer prize for investigative journalism awaits?
    Kind regards,

  2. “But which firm is the next Wolf?”
    I would love to be able to say “Alkane” (with lots of HREE in the mix, their 4 zirconium/niobium MoUs concluded, a REE MoU imminent, a working industrial scale pilot plant and positive noises re financing, their DZP is a natural contender), but considering how long it takes the NSW state government to grant the permit for the simple Tomingley gold project I fear that fasttracking the DZP is unlikely, unless the Australian central gov could somehow intervene and make it a matter of national interest …
    WRT to tungsten, imO there are lots of projects out there that could produce tungsten as a byproduct – all a question of the prices for tungsten and the other minerals in the ore. E.g. http://www.ytcresources.com/i/View_Page.aspx?id=22&Lvl=7,22&DGrd=0

  3. Thanks Robert.
    Perhaps I’m reading too much into it but I found the named shareholders interesting given their stakes in Molycorp. Is the “invisible hand” perhaps steered?

  4. Who would have thought there was a mine in Devon that hadn’t been turned into a golf course long ago? But it looks like any other abandoned mine in North America. I guess it’s not too surprising to someone familiar with REE mining interest. And, yes, I agree with Graeme’s conclusions.

  5. Yes, antimony is a good place to invest right now. I’m long on UAMY.
    Regarding Wolf Minerals, I’m also watching this as well. Be advised that they’re only 50% funded and will need to do a combination of off take agreements and a second round of equity funding in the next year. I’m waiting for the second offering before I jump into this one. Worth keeping an eye on in the interim.

  6. Another Chinese-USA REE “star wars” clash is brewing in the Far East?
    This month the overriding story effecting the REE space is geopolitical and military stand off
    is once again China v. ROW standoff.
    The North Korean long range ballistic launch on the 100 year “birthday celebration is scheduled to happen on 12-16 April 2012, 9 to noon, dates and time a bit flexible due to desire for good launch conditions.
    The 2010 “Fishing boat incident” that catapulted non-Chinese REEs into orbit was really, according to UK Telegraph “Wikileaks” leaked government documents, a story of China v. ROW as USA put into Japan the “Star Wars Shield” also known as anti-missile defense shield.
    Now the USA, Japan, etc have the anti-missile defense shield on high alert, ready to shoot down China’s “surrogate” North Korea’s long range ballistic missile.
    Now that is a real REE story. REEs in action. From China’s point of view, military grade REEs in the hands of their enemies, ready to curtail China’s ambitions to control Chinese Seas and International waters.
    Chinese sourced REEs in adversaries hands, used in spy satellites, multination command and control coordination under USA leadership, anti-missile defense shield just “spitting distance” in land and sea based positions within Japanese and American destroyers and land sites.
    If this scenario plays out, what is the fallout? The ups? The downs? For whom?
    What about Lynas? Other non-Chinese REE wannabes?
    What about “sleepy” nations that are REE deficient, with “big bloated chests” on the world stage?
    How critical is the need for non-Chinese sources for all Strategic metals is war breaks out?
    RMB and RMB bloggers, you are smart. I do not have to tell you “how to connect the dots”.
    What is my assessment of the Malaysian political action? All good for Lynas, and the shorts shall be “soiled big time” soon if there is a “big blow up” emanating from the Korean peninsula, and tsunami tidal waves for years to come.
    Kind regards.

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