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What is MDEF™ Investing? Strategy before tactics. Strategic investments dictate tactical actions in the Metals, Defense, Energy & Food sectors.

- Jeffrey C. Borneman

Budding Chinese, Russian Marriage Based On Rare Earth Metals Flourishes

Jeffrey C. Borneman | September 22, 2014

"The Ukraine crisis – and China’s rare earths industrial consolidation and reform – has given Russia an unprecedented incentive to develop a rare earths mining industry ... " reports Investorintel.

Why is the phrase "unprecedented incentive to develop a rare earths mining industry" important to investors? Because rare earth metals, aside from being "essential for the production of hard drives, satellites, lasers, digital cameras, wind turbines, fluorescent lights, electric motors, hybrid, mobile phones, guided projectiles, new generation radar and many other items that are of special military interest," also are "essential to the production of directed energy weapons."

Warfare is evolving. It must, as missile and missile defense is cost-prohibitive. The US knows the future of War and Defense spending lies in weapon systems thusly described by Investorintel: " ... absolutely innovative systems that, instead of hitting a target with a bullet, invade it with electromagnetic radiation, plasma or high energy laser beams. They are weapons of power, precision and speed, offering much lower operating costs than conventional weapons," as demonstrated recently by the Israeli Defense Force.

Just as the US is hindering Russia's Energy production, thereby limiting its ability to build-out its War machine, Russia intends to hinder US capability to develop its next generation of weapons. The US has been at the forefront in the development of these new weapons systems but has "suffered projects delays, due to the difficulty of overcoming the supply problem" (of rare earths).

"China is the country with the largest reserves of rare metals (between 35 and 45%) and, since 1986, has made the greatest effort to support technological research in the field. Russia has the largest reserves after China – about 20% of the world’s known reserves – but recently there have been new discoveries in the region of Murmansk and the Kola Peninsula," so an affiliation of sorts makes sense for both countries: China's know-how and Russian reserves - together they control approximately 60% of known resources.

The US is not without its (small) share of rare earth metals and, while the US Department of Defense "has launched some inquires and legislative proposals to address the rare earths supply issue," we are told the findings were not encouraging. What this means to investors is: If China and Russia were to shut down sales of rare earth metals to the US (or limit them as it did several years ago), forcing the US to rely on its scant domestic supply, Defense projects requiring rare earth metals would that precedence over non-military applications and the price would be very high.

If you want to know more about how the MDEF™ Investing strategy is positioned in this, or other geopolitical possibilities, please contact us directly.

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