Risk & Opportunity: WTO Case On China Rare Earths (MCP, REE, REMX)

Word of a case being filed at the World Trade Organization is going to have rare earths back in focus.  The Obama administration is set to be bringing a case against China over its quotas of rare earth material exports during the last year and this is said to include the European Union and Japan.  Considering that many of these materials are crucial in manufacturing hybrid batteries, consumer electronics, weapons, smartphones and many other items.

China has about one-third of the world’s known rare earth materials at issue, but it currently produces what some estimate as 90% of production.  Investors probably should be reminded here that rare earth prices have already come down from last year’s highs during the initial saber-rattling that took place around China’s curtailing of exports.

Molycorp, Inc. (NYSE: MCP) has the most to win or lose here as it is the sole production-scale outfit in the United States.  Its shares have already risen in the last two days from under $26 to almost $30 and the Tuesday pre-market indication was up 2.4% at $30.55.

Another potential emerging player is Rare Element Resources Ltd. (AMEX: REE) and there is the ETF via the Market Vectors Rare Earth/Strategic Metals (NASDAQ: REMX).

JON C. OGG