Doom or Dawn ?, page-19

Yes Cafa, it is clear to those with a little insight that it is the underlying long term demand fundamentals for rare earths that matters, not a temporary drop in demand because consumers think they will get it cheaper tomorrow or next week because speculators need to liquidate, or because the current state of the global economy means commodity prices have taken a hit. Chinese government needs to support its industry to grow and thrive by cleaning up its act both literally, due to environmental concerns and also stamping out corruption and illegal low priced supply in the industry. Recent consolidation of the industry, reforming taxes and a greater focus on R&D are only just the beginning, in my view. The crisis in rare earths 2011 did not happen suddenly. China had been warning rest of world way before then that they had to bring their own supply sources on line and that China itself would begin to restrict supply. Lynas did not come about because the price increase in 2011, but because Nick Curtis saw the big long term picture. Ironically, it was those unsustainably high prices that damaged the industry, not low prices. There will be room for sustainable rare earth production outside China in addition to sustainable Chinese supply, not instead of it, as world demand projections show. There is absolutely nothing for China to gain by selling rare earths cheaply to the rest of the world. And rest of world have a lot to lose if they allow China a competitive edge in harnessing the properties of rare earths while row stick with inferior substitutes. Until and unless there is a real leap forward in technology to replace rare earths economically in applications where there are currently no suitable substitutes, Rees have a bright future.