First A Definition. Rare earths are a group of 17 elements with names you probably have never heard of. They have not found wide use in the economy despite he fact that they aren't really that rare except when compared to iron, copper, and aluminum which are found in relative abundance. During the past few years their applications have increased mainly because they can be made into very strong, permanent magnets that are highly useful in the manufacture of several somewhat high-tech applications such as batteries, for wind turbines, hybrid cars, and guided missiles.
Why Are They In The News? Because China controls 90% of the World's supply. We have been buying virtually all our rare earths from China at a price cheaper than we could make them ourselves. This still wouldn't be a problem except that China has decided that they may need to conserve their supply and cut their exports of these elements by 72%, leaving the rest of the world to cope with the resulting shortage on their own. Investment bankers have been promising investors huge returns for investing in companies that have been formed to exploit Non-Chinese sources of these materials. One such company is Molycorp, a NYSE company with headquarters in Colorado. Molycorp is no neophyte in rare earths. They have been mining a concentrate which can used to extract these elements for a number of years. In a recent public offering they raised $379 million to expand their operation from mining concentrate to one in which they take the concentrate to the individual elements and then to finished magnets. They claim they have improved these processes to allow the production of the finished product at less than currently available in China.
There are several companies that have announced their intent to expand their rare earth business. I have not researched them all but, if you are looking to get in on the ground floor, it might make sense to diversify into this area. Despite the hype from the investment banking community, I believe that these are high risk investments and there are a number of variables that may not be evident as yet. Still, this might prove to be an interesting investment for those willing to devote a small amount of their portfolio to a high-risk investment. I plan to continue to research companies in this field.
Considerable Conventional Energy Exploration in Colorado. Despite pressure from the environmental lobby, a number of companies are looking to exploit oil and natural gas from a formation in Colorado known as Niobrara Shale. This formation encompasses land in Colorado, Wyoming, Kansas, and Nebraska and is in it's infancy. Still, it is being compared to to the Bakken Shale in North Dakota and Montana. This formation has made a tremendous contribution to the economy of North Dakota. A host of small and large companies are working in this area and producing both oil and natural gas. Hopefully, this will get by environmentalists to produce energy that will be desperately needed until we can come up with more economical renewal sources.
What About The Conoco Corporate Center. It's been at least a year and possibly two since I learned of Conoco's acquisition of 400+ acres of land near Louisville to be used for construction of a world class corporate training and research center. The eventual employment target is 7,000 employees which should mean a billion dollar impact for the area. Despite all the hype, I noticed that the total project is anticipated to take 20-25 yeas to complete. Thanks a lot. I would be almost 100 by then. The good news is that construction is scheduled to begin in time for completion of phase 1 by 2012. Hopefully, I'll live long enough to see at least some of that project completed.
I Will Be In Colorado Late This Week. Call my cell phone at 303-902-3940 to arrange a meeting.
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