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Article in the Australian Today

The Australian
Aussie miners dominate fund tracking rare-earths index
Matt Whittaker
From: The Wall Street Journal
October 29, 2010 11:42AM

VAN ECK Global has launched the first US-listed fund investing exclusively in producers of strategic metals including rare earths.
The metals, used in electronics and military applications, have come under the spotlight recently as China, which produces virtually all of the globe's rare earths, has cut back exports of the materials.
Shares of Market Vectors Rare Earth/Strategic Metals ETF fell US99c, or 5 per cent, to $US19.51 in their first day of trade on the New York Stock Exchange.
Prices of some of the 17 rare-earth materials have risen as much as 10-fold in the past two months alone, as some Japanese companies had reported delays in receiving shipments from China due to more-stringent customs checks by Chinese authorities.
Japan had said China was using the unofficial ban on exports to the nation as a bargaining chip in some territorial disputes.
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The new fund aims to track the performance of companies that have the capacity to derive at least half of their revenue from producing, refining or recycling the metals.
It seeks to replicate the price and yield performance of the NYSEs Market Vectors Rare Earth/Strategic Metals Index.
Companies in the index include Australia's Iluka Resources and Lynas, US-based Molycorp, Canada's Avalon Rare Metals and Hong Kong-listed China Rare Earth Holdings.
Strategic metals include manganese, titanium and tungsten.
Rare-earth metals are a subset of this category and include neodymium, used to make lightweight magnets, and cerium, used in LCD polishing powders.
They have more specialised uses and are often more difficult to extract in economical quantities than base metals like copper, tin and lead.
The Van Eck fund joins a growing number of ETFs seeking to capitalise on the boom in commodities in recent years.
The most popular have been physically backed versions that track gold. Physical base metals ETFs have also recently been announced.
ETFs that track indexes have also proliferated, including in more-obscure metals, like the Global X Lithium ETF.
"We believe REMX offers investors balanced exposure to the sector first by including strategic metals as well as rare earths and second by including processors and recyclers, not just mining companies," Jan van Eck, a principal with Van Eck Global, said.
As of earlier this month, Australia had the largest weighting in the index, with 23.9 per cent, followed by Canada with 19.81 per cent, the US with 18.77 per cent and China with 14.84 per cent.
Even though China produces 97 per cent of the world's rare earths, the index is limited to equities available to foreign investors.
In July, Beijing announced a 72 per cent cut in its rare earths export quota for the second half of the year to 7976 tonnes, from 28,417 tonnes during the same period last year.
Germany has been the most publicly vocal critic of China's actions within the European Union and says it plans to raise the issue with the World Trade Organisation as well as at the forthcoming G-20 meeting in Seoul next month.
China denies any wrongdoing.

Ciao,
Tony