Huge Rare Earth Metals Discovery in the Pacific Seabed

For the many who believe in various “Peak” theories—seen as the shrinking of “finite” supplies of specific natural resources/commodities (e.g. oil, copper etc…)—their fundamental error has been to ignore the laws of economics and human ingenuity.

This also applies to entities who operate under such premises and think that they can monopolize or control supply of natural resources by restricting trade. This applies particularly to rare earth metals.

The BBC.co.uk reports,

Japanese researchers say they have discovered vast deposits of rare earth minerals, used in many hi-tech appliances, in the seabed.

The geologists estimate that there are about a 100bn tons of the rare elements in the mud of the Pacific Ocean floor.

At present, China produces 97% of the world's rare earth metals.

Analysts say the Pacific discovery could challenge China's dominance, if recovering the minerals from the seabed proves commercially viable.

The British journal Nature Geoscience reported that a team of scientists led by Yasuhiro Kato, an associate professor of earth science at the University of Tokyo, found the minerals in sea mud at 78 locations.

"The deposits have a heavy concentration of rare earths. Just one square kilometre (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption," said Yasuhiro Kato, an associate professor of earth science at the University of Tokyo.

The minerals were found at depths of 3,500 to 6,000 metres (11,500-20,000 ft) below the ocean surface.

My comments

One, China’s apparent monopoly on rare earth metals will be challenged by such findings.

Two, the laws of economics work: High prices translates to profitable opportunities for the market to discover alternative sources of supply

Three, innovative technology trends help underpin such supply sourcing. Yes, the above development points to seabed mining as the next major frontier in resource exploration.

Fourth, prices founded on current (‘peak’ and monopolists) premises will likely be affected.

So far, the REMX (Market Vectors Rare Earth ETF) have been on a downswing, along with a major US rare earth producer Molycorp [MCP] even before the news was released (maybe the market has anticipated this).

Yet aside from the above the dynamics of supply-demand balances, there is also monetary factor to always consider. So while prices of rare earth may be pressured by supply side discoveries, continuation of policies of inflationism may partly offset such declines.

Like any endeavor, there will always be naysayers or detractors (or perhaps defenders of the current monopolists)

From the same article,

The prospect of deep sea mining for precious metals - and the damage that could do to marine ecosystems - is worrying environmentalists.

Are these environmentalists really working to “save” the environment? Or are they there to promote vested interest groups or simply advancing the cause of etatism?