1. London Metal Group specialising in Rare Earth
Investments, Rare Earth Commodities and Rare Earth
Metals, we aim to offer investors a professional service
which can enable them to make wise and profitable
choices in this particular investment arena.
London Metal Group
Citibank Tower
Canada Square
Canary Wharf
London E14 5LB
www.rare-earth-investments.com
info@londonmetalgroup.com

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“Rare Earth Dispute Heightens China-US Divide”
Rare Earth Metals have come to dominate world economic and investment
headlines in recent months. The underlying reason for this comes down to
one of the most basic economic principles: supply and demand.
The Chinese being the largest producer of these metals account for almost
95% of the metals supplied.
They have for environmental and economic reasons decided to restrict the
supply of these precious metals which are very much in demand.
In this report, LMG (London Metal Group) takes a more in depth look at this exciting
investment arena.
In classical economic theory, the relation between demand and supply determines the
price of a commodity. This relationship is thought to be the driving force in a free
market.
As demand for an item increases, prices rise. When manufacturers respond to the
price increase by producing a larger supply of that item, this increases competition
and drives the price down.
The relationship between demand and supply underlie the forces behind the allocation
of resources. In market economy theories, demand and supply theory will allocate
resources in the most efficient way possible.

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“Battle for Rare Earth Supply Continues"
How is Demand and Supply affecting Rare Earth Metals?
• When demand for a product increases but supply remains the same, this can
lead to higher prices.
• When supply of a product decreases but demand remains the same, this can
also lead to higher prices.
Rare earth metals are used in many everyday
items that we take for granted, such as
magnets, mobile phones, digital cameras, car
batteries and laptop computers. Rare earth
metals are used in many other electronic
applications as well as lasers, optics, missiles,
and surveillance equipment.
The demand for rare earth metals is steadily
increasing. The supply of rare earth metals,
as we shall see, however, is not increasing along with demand, and could even
decrease.
The opportunity for investment in rare earth metals arises from the fact that there is
an ever-increasing demand of materials that are in relatively short supply, which
leads inevitably to rising prices.
What are Rare Earth Metals?
Rare earth metals are a set of seventeen chemical elements in the periodic table,
specifically the fifteen lanthanides plus scandium and yttrium. Despite their name,
rare earth elements are relatively plentiful in the Earth’s crust. However, because of
their geochemical properties, rare earth elements are typically dispersed and not
often found in concentrated and economically exploitable forms.
The few economically exploitable deposits are known as rare earth. It was the very
scarcity of these minerals that led to the term “rare earth”.

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Where do Rare Earth Elements come from?
Rare earth elements became known to the world in 1787 with the discovery of the
black mineral "ytterbite", extracted from a mine in the village of Ytterby in Sweden;
many of the rare earth elements bear names derived from this location.
Until 1948, most of the world's rare earths were sourced from sand deposits in India
and Brazil. Through the 1950s, South Africa took the status as the world's rare earth
source, after large veins of rare earth bearing monazite were discovered there. From
the 1960s until the 1980s, the Mountain Pass rare earth mine in California was the
leading producer.
Today, the Indian and South African deposits still produce some rare earth
concentrates, but they are dwarfed by the scale of Chinese production. China now
produces over 95% of the world's rare earth supply, mostly in Inner Mongolia, and all
of the world's heavy rare earths (such as dysprosium) come from Chinese rare earth
sources. New demand has recently strained supply, and there is growing concern that
the world may soon face a shortage of the rare earths.
What are common uses for Rare Earth Metals?
Rare Earth Metals have many uses. Today
they are mainly found in all our electronic
devices that we have come to depend on in
our modern day lifestyle such as mobile
phones and computers. Large quantities are
also consumed as catalysts and in the
production of glasses and sunglass lenses
and they are widely used in magnets and
phosphors. As technology moves on new
uses are being discovered for various rare
earth metals.

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Rare Earth Metals can be used in
superconductors, electronic polishers,
refining catalysts and hybrid car
components (primarily batteries and
magnets). They can have optoelectronics
applications, such as in lasers and optical-
fibre communication systems. Phosphors
with rare earth elements are also widely
used in cathode ray tube technology such
as television sets, night vision goggles, rangefinders, radar used in some warships
and fibre-optic transmission links that carry internet traffic. Lots of “green”
technologies depend on them, including wind turbines and low-energy light bulbs.
Demand already outstrips supply and China’s near monopoly limits the supply.
Growing demand from developing countries has led to additional strain on supply, and
there is increasing concern that the world may soon face a shortage of rare earth
metals, as borne out by the recent headlines. In several years worldwide demand for
rare earth elements is expected to exceed supply unless major new sources are
developed. China controls an estimated 95-99% of the known world’s supply.
Concerns about supply constraints have intensified due to the actions of China, the
predominant supplier.
China sent shock waves through the market in 2010 when it imposed export quotas
on all rare earth elements. In 2011, it imposed an export quota of 30,184 metric
tonnes, marginally reduced from 30,258 metric tonnes in 2010. Based on analyst
calculations, the country’s full-year quota for 2012 may hit approximately 31,130
metric tonnes.
China recently stated that the curbing of exports was motivated by environmental
concerns and not trade protectionism, and do not target any specific country. The EU,
however, has stated that foreign companies pay up to twice as much as Chinese firms
for rare earth metals, claiming that the restrictions benefit the Chinese industry alone
and are therefore against WTO regulations.

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Are there any alternative sources for Rare Earth metals?
Due to the increased demand and tightening restrictions on exports of the metals
from China, some countries are stockpiling rare earth resources. Searches for
alternative sources in the United States, Australia, Brazil, Canada, South Africa and
Greenland are ongoing. The Mount Weld project in Western Australia, for example,
plans to double production as it moves into the second phase of mining. Mount Weld
is touted to have the world’s richest rare earth deposit, and is expected to produce
some 1.1 million tonnes of rare earth oxides. That’s enough to supply up to 20 per
cent of the global market for 30 years, according to some analysts, but for the time
being China will remain the dominant source.
How can I invest in Rare Earth Metals?
Rare earth elements are not exchange-traded in the same way that precious (for
instance, gold and silver) or non-ferrous metals (such as nickel, tin, copper, and
aluminium) are. Instead they are sold on the private market, which makes their prices
difficult to monitor and track. However, prices are published periodically on the
internet. The 17 elements are not usually sold in their pure form, but instead are
distributed in mixtures of varying purity. As such, pricing can vary based on the
quantity and quality required by the end user’s application. The fact that markets are
not transparent only increases their attractiveness as an investment vehicle. The
savvy investor is able to exploit price movements to maximize returns. Some
investors may choose to buy stocks of mining companies involved in rare earth
metals. There are many variables at play when investing in this way, such as
company overheads and expenses, cash flow and environmental issues. Investors
need to study the fundamentals of these companies before making decisions on
whether or not to invest.
An alternative strategy is to buy the actual physical Rare Earth Metals. In this way,
investors can protect their assets from currency devaluation and or inflation. Like gold
rare earth metals are an insurance against the economic downturn. Understanding the
Rare Earth market so you can make informed investment decisions is vital and key to
success.

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“China Still Ahead in Rare Earth Economic War”
Why now? What’s all this about China?
Long term investment prospects for Rare Earth Metals look very promising.
Rare Earth Metals have had quite a lot of press recently. Many factors have caused
this, chief of which is China’s export policies.
Chinese officials, in an attempt to discourage illegal trading of rare earths, as well as
an effort to reduce the environmental impact of Rare Earth mining, slashed export
quotas over 70 percent.
The media picked up this story, and as a
result governments and international
electronics companies were scrambling for
answers. The world started catching on to
the importance of Rare Earths, and the
power that the Chinese monopoly holds
over the market with over 95 percent of
world supply.
There are no signs on the horizon that these export quotas will be dropped, and as a
result prices of these elements should continue to rise.
Analysts maintain that Rare Earth Metal demand, which has been growing at about 10
per cent a year, is set to soar given the global need and growing use of green
technology which use lots of these different metals in various applications.
The growing numbers of people in the developing world who will also provide a
market for electronic goods will only push demand higher.

8. 8
Growing Demand for Hybrid Vehicles and Green Technologies
Not just hybrid vehicles, they are increasingly
being used in gasoline vehicles-emission
controls, LCD and PDP displays, and are used
to make high-strength magnets. Several Rare
Earth Metals are essential constituents of both
petroleum fluid cracking catalysts and
automotive pollution-control catalytic
converters. They have applications in many
electronic devices. Even your favourite digital
camera has Rare Earth Elements. Some even point to its effective use in military
defence systems and insist that it is bound to be a $1-billion industry in the United
States in the near term.
There has been a dramatic shift in the last three years from oversupply to supply
shortages. And some experts fear that China is set to engineer a supply crunch to suit
its own domestic industries. This is an idea that is gaining ground and is sending a
wave of panic across the globe. Panic breeds opportunity.
As China diverts reserves to build domestic
solar panels and modernise its army, the
price of these non-exchange-traded metals
are only bound to escalate. For example,
China has only allocated 38,000 tons of rare
earths for export this year, yet demand from
Japan alone is expected to be 40,000 tons
this year.
An article in the Independent quotes Rare Earth metals expert Jack Lifton as saying,
“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.”

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“Rare Earth Market Defies Bleak Forecasts”
Why invest in Rare Earth Metals?
Given that environmental applications of Rare Earth Metals have only increased
markedly over the past three decades, analysts maintain this trend will undoubtedly
continue, given growing concerns about global warming and energy efficiency.
For the immediate future, there appears to be some investment plays for rare earth
metals. And if one believes that the future holds large numbers of hybrid cars and
those catalytic converters will continue to be used to clean the exhaust of the world’s
internal combustion engines, then with Rare Earths is clearly where the action lies.
Investing in rare earth metals with London Metal Group
LMG specialises in Rare Earth Investments, Rare Earth Commodities and Rare Earth
Metals, we aim to offer investors a professional service which can enable them to
make wise and profitable choices in this particular investment arena. For a free
investment guide go to free rare metal investment guide
Find out what we can do for you by visiting our website

10. 10
www.rare-earth-investments.com2
LONDON METAL GROUP
Rare Earth Metals Report
Rare Earth Investments
5/24/2012
London Metal Group specialising in Rare Earth Investments, Rare Earth Commodities and Rare
Earth Metals, we aim to offer investors a professional service which can enable them to make
wise and profitable choices in this particular investment arena.