Rare earths miner Arafura Resources Limited (ASX:ARU) redoubles efforts

China’s recent announcement that it will slash its exports of rare-earth metals by 35 percent has a small Australian mining company, Arafura Resources Limited (ASX:ARU), redoubling its efforts to get its rare-earth deposits out of the ground.

China’s recent announcement that it will slash its exports of rare-earth metals by 35 percent has a small Australian mining company, Arafura Resources Limited (ASX:ARU), redoubling its efforts to get its rare-earth deposits out of the ground. The company issued $37.6 million AUD in debt to help get its rare-earth mines at Nolans Bore and the Whyalla Rare Earths Complex in Australia operational by 2013.

Both mines are lumped together as the “Nolans Project,” and Arafura expects to be pulling some 20,000 tonnes of rare earth oxides from the sites every year for the next 20 years. If they can meet that target, they’d be controlling roughly 10 percent of the world’s rare-earths supply.

Still, they face stiff competition from Lynas Corporation (PINK:LYSCF) and Colorado-based Molycorp, Inc. (NYSE:MCP). MCP hopes to double its rare earths output by 2012 to 40,000 tonnes from 20,000 tonnes, according to a Bloomberg interview with CEO Mark Smith. “We will be making some presentations in the first quarter to our board of directors on the economics involved of doubling production,” Smith told Bloomberg.

Investors were bullish on shares in MCP and ARU on Monday pushing both stocks up nearly 15 percent. The stocks tapered off yesterday, but it remains a race against time to see which company can ramp up to meet global demand for rare earths the fastest.

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China’s uranium supplies expected to fall 17,000 tons short by 2020

Uranium demand in China is expected to grow to 20,000 tons a year by 2020. That’s some 17,000 tons less than the country expects to be able to produce by then.

Recognizing that China has a major problem looming if it hopes to continue growing its nuclear power supplies, Chinese scientists are hard at work trying to find ways to extend uranium’s usage rate. Touting a recent break-through at “the No 404 factory under the China National Nuclear Corp (CNNC),” the CNNC’s director went on national television to announce they’re at the early stages of “(boosting) the usage rate of uranium materials at nuclear plants by 60 times.”

If such an increase were possible, scientists expect China could have a self-sufficient supply of uranium in the years to come. If it’s not possible, the country will have to ramp up imports by some 800 percent over the next decade. Scary thought!

Uranium demand in China is expected to grow to 20,000 tons a year by 2020 as the country looks to expand nuclear power capacity to 40 gigawatts (gW) from its current level of 9 gigawatts (gW), according to figures from the World Nuclear Association. That’s a lot of uranium considering the fact that China expects to produce only 2,400 tons of uranium domestically in 2020.

That could be a big boon for uranium miners and suppliers around the world, and it could explain the eye-popping returns on some leading uranium stocks in 2010. Not everyone, it seems, has faith that we’ll be able to extend the usage rates for uranium, and I’ll remain bullish on uranium until we get conclusive proof to the contrary.

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World copper consumption supply and demand in 2011

How much copper does the world consume each year? And where can we expect prices to go in 2011?

Worldwide copper consumption

After a shortfall of some 436,000 tons of copper last year, investors are bullish on the red metal in 2011. But just how much copper does the world consume? The short answer is roughly 20 million tons a year according to the World Bureau of Metal Statistics.

Global demand for copper grew by 8 percent during the first nine months of 2010 (per Reuters), and that’s got some investors calling for copper to rise above $11,000 per ton this year.

Estimates for global copper shortfalls in the coming years range from 380,000 tons to 500,000 tonnes in 2011 and Standard Bank predicts a deficit of 562,000 tonnes in 2012, according to Business-standard.com.

Investor demand from physical copper ETFs could add even more pressure to an already strained market. That’s good news for investors and miners, but it could also drive up commodity prices in the midst of a fragile economic recovery.

Still, the ingredients seem ripe for a bubble in copper prices. There’s growing demand, looming inflation, a projected shortfall in supply and the emergence of physical copper ETFs. It’ll be interesting to see if those factors have the red metal shining brighter than its flashier cousins this year.

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How to invest in rare earths stocks

China currently produces 99 percent of the world’s rare earths supply. It seems Beijing has realized it can exploit that control, too, by cracking down on illegal rare earths mining within the country and limiting exports abroad. On Tuesday, China’s commerce ministry…

China’s growing stranglehold on the production of commodities and metals like coal, iron ore, tungsten, antimony and tin give the Chinese government more control over foreign businesses than we might like to admit. And yet, it’s China’s control over heavy rare earth materials that really makes me nervous.

Consider this: China currently produces 99 percent of the world’s rare earths supply. It seems Beijing has realized it can exploit that control, too, by cracking down on illegal rare earths mining within the country and limiting exports abroad. On Tuesday, China’s commerce ministry announced its export quotas for rare earth metals will drop by 35 percent during the first six months of 2011.

Why does that matter? Because heavy rare earths are vital in the production or operation of high-tech goodies like iPhones, Blackberries, wind turbines and nuclear power plants.

Shares in rare earth stocks rocketed up on the news. Want to get in on the action? Here’s a short list of rare earths stocks:

  • Molycorp, Inc. (NYSE:MCP); +394 percent YTD
  • Rare Element Resources Ltd. (CVE:RES); +263 percent YTD
  • Neo Material Technologies Inc. (TSE:NEM); +68 percent YTD
  • Lynas Corporation Limited (ASX:LYC); +255 percent YTD
  • Medallion Resources Ltd. (CVE:MDL); +157 percent YTD
  • Ultra Uranium Corp. (CVE:ULU); +54 percent YTD
  • Fieldex Exploration Inc. (CVE:FLX); -15 percent YTD

Not interested in picking individual rare earths stocks? There’s at least one rare earths ETF that will help you diversify in the sector: the Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX). The relatively new ETF launched in October and has risen 22 percent since then with a big chunk of the gains coming on Tuesday’s export news out of China. The ETF was up 7 percent yesterday.

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How to invest in palladium

Palladium ETFs are a newcomer on U.S. stock exchanges, and they could help drive up investor demand for palladium.

Since it doesn’t end up in the news very often, individual investors rarely look to palladium as an investment option in the precious metals field. That could change in the coming year as 2010’s return on palladium (+83 percent YTD) has out-paced gold (+24 percent), silver (+71 percent) and platinum (+16 percent YTD).

Why the spike in palladium?

Of the big four precious metals (gold, silver, platinum and palladium), platinum and palladium are closely tied to economic development. Since both metals are used extensively in the production of catalytic converters for automobiles, they do well when economies are expanding (think China and India). Palladium could also see increased investor demand thanks to new ETFs and plans by the U.S. Mint to start producing American Eagle palladium bullion coins.

How can I invest in palladium?

There are a handful of ways to legitimately (and fairly safely) invest in palladium:

  • Buy palladium bullion coins
  • Buy stock in a palladium ETF (exchange-traded fund)
  • Buy stock in a palladium mining or palladium recycling company

Where can I find palladium bullion coins?

U.S. President Barack Obama signed a bill into law on Dec. 14, 2010, that would “authorize the production of palladium bullion coins” by the U.S. Mint. No word yet on when the palladium bullion coins will hit the market. Expect them to be a hot commodity, though, if for nothing else than owing to their scarcity.

After being discontinued in 1999, the Canadian Mint started producing its Palladium Maple Leaf one-ounce palladium bullion coin again in 2005. Individuals cannot purchase coins directly from the mint, but Canadian palladium bullion coins are available through coin dealers and occasionally on auction sites like eBay. Still, they’re difficult to find.

Other palladium bullion bars and coins from countries like Switzerland, China, Russia and France are available on various web sites and via coin dealers. Make sure you FULLY understand what you’re buying before you try to acquire these coins or bars.

Palladium ETFs

Palladium ETFs are a newcomer on U.S. stock exchanges. There are currently two palladium ETFs on the NYSE that I’m aware of:

  • ETFS Physical Palladium Shares (NYSE:PALL): A palladium ETF that looks to match movements in the palladium spot price minus fees
  • ETFS White Metals Basket Trust (NYSE:WITE): A physical silver, platinum and palladium ETF that started trading on Dec. 3, 2010

Finding the best palladium stocks

Palladium mining stocks operate in a small niche. Most of the world’s palladium deposits are concentrated in just four countries: Russia, which produces 44+ percent of the world’s palladium, South Africa, which produces 40 percent, Canada, which produces 6 percent and the U.S., which produces 5 percent.

The biggest deposit in the U.S. is concentrated in the Stillwater igneous complex in Montana (incidentally the home state of Rep. Dennis Rehberg who introduced the American Eagle Palladium Bullion Coin Act of 2010). Stillwater Mining Company (NYSE:SWC) is an obvious candidate for buying a palladium stock. Stillwater’s shares are up 116 percent YTD.

Here are some palladium stock suggestions for further research as we move into 2011:

  • North American Palladium Ltd. (AMEX:PAL), +89 percent YTD
  • Noril’skiy nikel’ GMK OAO (PINK:NILSY), +64 percent YTD
  • Anooraq Resources Corporation (AMEX:ANO), +66 percent YTD

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Palladium Image Source: http://images-of-elements.com/palladium.php

Top five penny lithium stocks of 2010 (EFL, OROCF, AVL, GXY, CLQ)

Trying to get out in front of the lithium craze? Not a bad idea considering the fact that GM thought the technology was a decade away from mass production (until Tesla came along and shot that theory to hell). Here are the top-performing lithium penny stocks of 2010.

Lithium penny stocks

Trying to get out in front of the lithium craze? Not a bad idea considering the fact that GM thought the technology was a decade away from mass production (until Tesla – NASDAQ:TSLA – came along and shot that theory to hell). Here are the top-performing lithium penny stocks of 2010. I just wish I would have discovered them twelve months ago!

1) Electrovaya Inc. (TSE:EFL), +187% YTD

2) Orocobre LTD. (PINK:OROCF), +179% YTD

3) Avalon Rare Metals, Inc. (TSE:AVL), +34% YTD

4) Galaxy Resources Limited (ASX:GXY), +14.8% YTD

5) Canada Lithium Corp. (TSE:CLQ), +125% past three months

Honorable Mention goes to Talison Lithium LTD., which trades on the Pink Sheets under ticker TLTHF. Although it’s not technically a penny stock at $6.40 per share, it is, nonetheless on a limited exchange. Best of all, it’s up 43.3 percent YTD.

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