March 21, 2011 – (Robin Bromby, Editor, REE World Report) -- Some REE stocks took a tumble after the triple Japanese disaster, but here are some reasons why I think that REE demand and prices will remain strong (and brace myself for some opposing views). Japan is one factor, the other being the rest of us getting on with life.

Reason #1: Japan is China’s single largest customer for REE, so you might have expected prices to take a tumble since the earthquake-tsunami-nuclear meltdown. There is no evidence of this - so far. The latest prices (as of March 18, a week after the terrible ’quake) show a continuing trend to the upside. Of course, the April figures may show a different pattern but we as yet have no evidence that the Japan situation has affected REE But between February 11 and March 18, according to figures (all in $US per kilogram) released by Australia’s Arafura Resources, praseodymium oxide rose from $141 to $156; neodymium oxide went from $149 to $170; europium oxide from $770 to $820; gadolinium rose by $25.50 to $130.50; dysprosium was up from $467 to $517 and terbium went from $780 to $810.

Reason #2: The talk is that Japanese reconstruction will cost somewhere north of $200 billion. Much of that will be in the form of cement, copper, iron ore, and so on. But some of the money will be spent on technology for which REE are vital. But we can easily forget that Japan - and even to some extent the state of global finance -  is only part of the picture. Life goes on elsewhere, so there‘s ….

Reason #3: There are many items involving REE where demand is not contingent on strong economic growth, and wind turbines is one. Notwithstanding the local opposition to wind farms in many Western countries, the developing world is building them as part of the drive to provide reliable electricity to as many people as possible. A $89 million wind farm project has just been announced for Mexico, and the Philippines continue to embrace this energy form. Moreover, there are plans to build turbines that can generate a massive 20 megawatts.

Reason #4: The military demand will remain strong. REE is needed in guided missiles and smart bombs - which will need more replacements after the Libyan intervention. But REE are everywhere in our weaponry and systems.

Reason #5: The reports that China may start importing REE because its own production cannot satisfy domestic demand.That all suggests a very tight supply-demand balance globally. Reason #6: You and me, and people like us. We want the latest tech toy, the latest designs of hybrid car, the best widescreen television we can afford, a new cell phone. We want all the technology that we can get, and much of it is dependent on REE. It’s like thermal coal always being a bet in tough economic times because, while they may forego vacations and fancy restaurants, people want air-con on hot days, and that means electricity. Ditto with gadgets, and that means REE.