Vertical Integration & China Concerns Boost REE Demand

Rare earth elements (REEs) may not be all that rare in the earth’s crust, but companies and governments are snatching up and developing properties at a rapid clip to secure their supply. After all, the elements are critical in a number of different applications, ranging from obscure industrial magnets to x-rays and MRI contrast agents used in medical applications.

Toyota Motors Inc. (NYSE:TM) is a great corporate example of these trends. Toyotsu Rare Earth Canada Inc. – a Toyota company setup to secure rare earth elements used in automotive and non-automotive production – recently purchased a 25% undivided pre-production interest in the Matamec Exploration Inc.’s (TSX-V:MAT) Kipawa HREE Deposit for CAD$8.5 million.

Meanwhile, the United States government continues to invest in its own strategic reserves, given REEs use in many defense applications, too. Ucore Rare Metals Inc. ( UCU.V ) recently contracted with the U.S. Department of Defense to conduct mineralogical and metallurgical studies on the company’s Bokan Mountain heavy REE property in Southeast Alaska.

The U.S. is also working to secure non-defense related commercial supplies, with the U.S. Department of Energy recently awarding up to $120 million over five years to establish a so-called Energy Innovation Hub that will develop solutions to the domestic shortages of rare earth metals and other critical materials for U.S. energy security over the long-term.

Identifying U.S.-based REE Opportunities

China may be known for its leadership position in the REE industry, with over 90% of the world’s production originating from within its shores. But, the country began reducing its exports and production levels amid environmental concerns, and arguable, attempts to bring international companies onto its shores in order to secure a reliable supply without restriction.

Many companies and governments are therefore trying to establish reliable REE reserves outside of China in friendlier locations around the world. To this end, there’s been a lot of interest in Canada and, in some cases, domestically in the United States. In fact, Arizona has become a potential destination for REEs, according to one geologist’s recent comments.

Virginia McLemore from the New Mexico Bureau of Geology and Mineral Resources recently noted that the U.S. showed a big concentration of REE deposits in New Mexico. With the same rock types present in Arizona, which has had no major statewide assessment of its own to determine the potential for REEs, this could be a significant undiscovered opportunity.

Liberty Star Uranium & Metals Inc. ( LBSR ) is one public company operating in this promising new region. New geological field work conducted on a portion of its Arizona-based Hay Mountain claim block, part of the larger Tombstone Super Project (TSP), showed an anomaly covering at least 7 to 9 square miles that assayed for 4 of 17 REEs.

Numerous Catalysts for Investors Ahead

Liberty Star Uranium is now focused on further exploring these potential REE deposits in more detail, with additional assays and analysis to determine the scope of the find. According to CEO Jim Briscoe, “this round of geochemical studies is part of our methodical approach to exploration we must undertake given the presence of REEs. Since these REEs are associated with the porphyry copper anomalies, we are looking to undertake a ZTEM aeromag survey in the area this spring. Because of the size of the primary porphyry copper-gold-moly and the four subsidiary copper/gold anomalies nearby and within the REE anomalies, we believe that a large porphyry copper deposit or deposits will be developed. Synergistic common use of equipment and management infrastructure, weather making year around operation possible and nearby paved roads, labor source, power and water may drastically lower the cost of REE production, below that of many industry competitors.”

These upcoming surveys could provide a strong catalyst for the stock, which is trading near its lows, following efforts to clean up its balance sheet by divesting certain properties. Investors may therefore want to keep a close eye on this coming over the coming quarters.

For more information, please see the following resources:

www.libertystaruranium.com
http://www.libertystaruranium.com/investors/
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