1. London Metal Group specialising in Rare EarthInvestments, Rare Earth Commodities and Rare EarthMetals, we aim to offer investors a professional servicewhich can enable them to make wise and profitablechoices in this particular investment arena.London Metal Group Citibank Tower Canada SquareCanary WharfLondon E14 5LBwww.rare-earth-investments.com info@londonmetalgroup.com

2. 2Rare Earth Dispute Heightens China-US DivideRare Earth Metals have come to dominate world economic and investmentheadlines in recent months. The underlying reason for this comes down toone of the most basic economic principles: supply and demand.The Chinese being the largest producer of these metals account for almost95% of the metals supplied.They have for environmental and economic reasons decided to restrict thesupply of these precious metals which are very much in demand.In this report, LMG (London Metal Group) takes a more in depth look at this excitinginvestment arena.In classical economic theory, the relation between demand and supply determines theprice of a commodity. This relationship is thought to be the driving force in a freemarket.As demand for an item increases, prices rise. When manufacturers respond to theprice increase by producing a larger supply of that item, this increases competitionand drives the price down.The relationship between demand and supply underlie the forces behind the allocationof resources. In market economy theories, demand and supply theory will allocateresources in the most efficient way possible. 3. 3Battle for Rare Earth Supply Continues" How is Demand and Supply affecting Rare Earth Metals? When demand for a product increases but supply remains the same, this can lead to higher prices. When supply of a product decreases but demand remains the same, this can also lead to higher prices.Rare earth metals are used in many everydayitems that we take for granted, such asmagnets, mobile phones, digital cameras, carbatteries and laptop computers. Rare earthmetals are used in many other electronicapplications as well as lasers, optics, missiles,and surveillance equipment.The demand for rare earth metals is steadilyincreasing. The supply of rare earth metals,as we shall see, however, is not increasing along with demand, and could evendecrease.The opportunity for investment in rare earth metals arises from the fact that there isan ever-increasing demand of materials that are in relatively short supply, whichleads inevitably to rising prices.What are Rare Earth Metals?Rare earth metals are a set of seventeen chemical elements in the periodic table,specifically the fifteen lanthanides plus scandium and yttrium. Despite their name,rare earth elements are relatively plentiful in the Earths crust. However, because oftheir geochemical properties, rare earth elements are typically dispersed and notoften found in concentrated and economically exploitable forms.The few economically exploitable deposits are known as rare earth. It was the veryscarcity of these minerals that led to the term rare earth. 4. 4 Where do Rare Earth Elements come from?Rare earth elements became known to the world in 1787 with the discovery of theblack mineral "ytterbite", extracted from a mine in the village of Ytterby in Sweden;many of the rare earth elements bear names derived from this location.Until 1948, most of the worlds rare earths were sourced from sand deposits in Indiaand Brazil. Through the 1950s, South Africa took the status as the worlds rare earthsource, after large veins of rare earth bearing monazite were discovered there. Fromthe 1960s until the 1980s, the Mountain Pass rare earth mine in California was theleading producer.Today, the Indian and South African deposits still produce some rare earthconcentrates, but they are dwarfed by the scale of Chinese production. China nowproduces over 95% of the worlds rare earth supply, mostly in Inner Mongolia, and allof the worlds heavy rare earths (such as dysprosium) come from Chinese rare earthsources. New demand has recently strained supply, and there is growing concern thatthe world may soon face a shortage of the rare earths.What are common uses for Rare Earth Metals?Rare Earth Metals have many uses. Todaythey are mainly found in all our electronicdevices that we have come to depend on inour modern day lifestyle such as mobilephones and computers. Large quantities arealso consumed as catalysts and in theproduction of glasses and sunglass lensesand they are widely used in magnets andphosphors. As technology moves on newuses are being discovered for various rareearth metals. 5. 5Rare Earth Metals can be used insuperconductors, electronic polishers,refining catalysts and hybrid carcomponents (primarily batteries andmagnets). They can have optoelectronicsapplications, such as in lasers and optical-fibre communication systems. Phosphorswith rare earth elements are also widelyused in cathode ray tube technology suchas television sets, night vision goggles, rangefinders, radar used in some warshipsand fibre-optic transmission links that carry internet traffic. Lots of greentechnologies depend on them, including wind turbines and low-energy light bulbs.Demand already outstrips supply and Chinas near monopoly limits the supply.Growing demand from developing countries has led to additional strain on supply, andthere is increasing concern that the world may soon face a shortage of rare earthmetals, as borne out by the recent headlines. In several years worldwide demand forrare earth elements is expected to exceed supply unless major new sources aredeveloped. China controls an estimated 95-99% of the known worlds supply.Concerns about supply constraints have intensified due to the actions of China, thepredominant supplier.China sent shock waves through the market in 2010 when it imposed export quotason all rare earth elements. In 2011, it imposed an export quota of 30,184 metrictonnes, marginally reduced from 30,258 metric tonnes in 2010. Based on analystcalculations, the countrys full-year quota for 2012 may hit approximately 31,130metric tonnes.China recently stated that the curbing of exports was motivated by environmentalconcerns and not trade protectionism, and do not target any specific country. The EU,however, has stated that foreign companies pay up to twice as much as Chinese firmsfor rare earth metals, claiming that the restrictions benefit the Chinese industry aloneand are therefore against WTO regulations. 6. 6Are there any alternative sources for Rare Earth metals?Due to the increased demand and tightening restrictions on exports of the metalsfrom China, some countries are stockpiling rare earth resources. Searches foralternative sources in the United States, Australia, Brazil, Canada, South Africa andGreenland are ongoing. The Mount Weld project in Western Australia, for example,plans to double production as it moves into the second phase of mining. Mount Weldis touted to have the worlds richest rare earth deposit, and is expected to producesome 1.1 million tonnes of rare earth oxides. Thats enough to supply up to 20 percent of the global market for 30 years, according to some analysts, but for the timebeing China will remain the dominant source.How can I invest in Rare Earth Metals?Rare earth elements are not exchange-traded in the same way that precious (forinstance, gold and silver) or non-ferrous metals (such as nickel, tin, copper, andaluminium) are. Instead they are sold on the private market, which makes their pricesdifficult to monitor and track. However, prices are published periodically on theinternet. The 17 elements are not usually sold in their pure form, but instead aredistributed in mixtures of varying purity. As such, pricing can vary based on thequantity and quality required by the end users application. The fact that markets arenot transparent only increases their attractiveness as an investment vehicle. Thesavvy investor is able to exploit price movements to maximize returns. Someinvestors may choose to buy stocks of mining companies involved in rare earthmetals. There are many variables at play when investing in this way, such ascompany overheads and expenses, cash flow and environmental issues. Investorsneed to study the fundamentals of these companies before making decisions onwhether or not to invest.An alternative strategy is to buy the actual physical Rare Earth Metals. In this way,investors can protect their assets from currency devaluation and or inflation. Like goldrare earth metals are an insurance against the economic downturn. Understanding theRare Earth market so you can make informed investment decisions is vital and key tosuccess. 7. 7 China Still Ahead in Rare Earth Economic War Why now? Whats all this about China?Long term investment prospects for Rare Earth Metals look very promising.Rare Earth Metals have had quite a lot of press recently. Many factors have causedthis, chief of which is Chinas export policies.Chinese officials, in an attempt to discourage illegal trading of rare earths, as well asan effort to reduce the environmental impact of Rare Earth mining, slashed exportquotas over 70 percent. The media picked up this story, and as a result governments and international electronics companies were scrambling for answers. The world started catching on to the importance of Rare Earths, and the power that the Chinese monopoly holds over the market with over 95 percent of world supply.There are no signs on the horizon that these export quotas will be dropped, and as aresult prices of these elements should continue to rise.Analysts maintain that Rare Earth Metal demand, which has been growing at about 10per cent a year, is set to soar given the global need and growing use of greentechnology which use lots of these different metals in various applications.The growing numbers of people in the developing world who will also provide amarket for electronic goods will only push demand higher. 8. 8 Growing Demand for Hybrid Vehicles and Green TechnologiesNot just hybrid vehicles, they are increasinglybeing used in gasoline vehicles-emissioncontrols, LCD and PDP displays, and are usedto make high-strength magnets. Several RareEarth Metals are essential constituents of bothpetroleum fluid cracking catalysts andautomotive pollution-control catalyticconverters. They have applications in manyelectronic devices. Even your favourite digitalcamera has Rare Earth Elements. Some even point to its effective use in militarydefence systems and insist that it is bound to be a $1-billion industry in the UnitedStates in the near term.There has been a dramatic shift in the last three years from oversupply to supplyshortages. And some experts fear that China is set to engineer a supply crunch to suitits own domestic industries. This is an idea that is gaining ground and is sending awave of panic across the globe. Panic breeds opportunity. As China diverts reserves to build domestic solar panels and modernise its army, the price of these non-exchange-traded metals are only bound to escalate. For example, China has only allocated 38,000 tons of rare earths for export this year, yet demand from Japan alone is expected to be 40,000 tons this year.An article in the Independent quotes Rare Earth metals expert Jack Lifton as saying,A real crunch is coming.In America, Britain and elsewhere we have not yet woken up to the fact that there isan urgent need to secure the supply of rare earths from sources outside China. 9. 9 Rare Earth Market Defies Bleak Forecasts Why invest in Rare Earth Metals?Given that environmental applications of Rare Earth Metals have only increasedmarkedly over the past three decades, analysts maintain this trend will undoubtedlycontinue, given growing concerns about global warming and energy efficiency.For the immediate future, there appears to be some investment plays for rare earthmetals. And if one believes that the future holds large numbers of hybrid cars andthose catalytic converters will continue to be used to clean the exhaust of the worldsinternal combustion engines, then with Rare Earths is clearly where the action lies. Investing in rare earth metals with London Metal GroupLMG specialises in Rare Earth Investments, Rare Earth Commodities and Rare EarthMetals, we aim to offer investors a professional service which can enable them tomake wise and profitable choices in this particular investment arena. For a freeinvestment guide go to free rare metal investment guide Find out what we can do for you by visiting our website 10. 10www.rare-earth-investments.com2 LONDON METAL GROUP Rare Earth Metals ReportRare Earth Investments5/24/2012 London Metal Group specialising in Rare Earth Investments, Rare Earth Commodities and Rare Earth Metals, we aim to offer investors a professional service which can enable them to make wise and profitable choices in this particular investment arena.