why goldman sachs is dead wrong on rare earths

Extract from Matthew Smith, Seeking Alpha:

...Goldman Sachs is correct that with Mount Weld and Mountain Pass coming online, a large portion of the rare earths shortage would be bridged. However, this covers the light rare earth elements (LREEs) and hardly addresses the world's heavy rare earth element (HREE) demand, which will only grow. The rare earths are not interchangeable or substitutes for one another, so to make the blanket statement Goldman did hardly makes sense.

The statement makes as much sense as saying ExxonMobil?s (XOM) future looks bleak because the world will shortly be awash in natural gas via shale drilling, which will push oil prices lower. We know that statement has little basis, even though natural gas can be substituted for oil at various plants.

Now the world may very well be swimming -- or worse, drowning -- in Cerium and potentially Lanthanum in the future, but that will hardly have an effect on neodymium, praseodymium, europium, dysprosium, terbium or any of the other extremely in-demand heavy rare earth elements. In fact, the world will need to have a huge surplus of rare earths on a TREO basis in order to successfully supply the world's demand for each individual element.

It sounds crazy, but it is not. Most REE deposits are composed of LREEs, with the HREEs making up less than 5% of the TREO (for the best LREE deposits). Even the very rare HREE deposits have a LREE composition in the 50% neighborhood. Thus in the future, many more tons of LREEs will need to be produced simply to meet HREE demand.

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Full article here
http://seekingalpha.com/article/271394-why-goldman-sachs-is-dead-wrong-on-rare-earths