But the earliest new supply of rare earths for Japan could end up being India. Toyota Tsusho Corp. is reportedly set to start building a refining plant in India's eastern state of Orissa, possibly as soon as the end of this year. The refinery is expected to go online next autumn with an annual capacity of 3000 to 4000 tons of mineral ores for export to Japan. Such a deal sits well with the pledge by Indian Prime Minister Manmohan Singh on his just concluded trip to Japan, during which he agreed to co-operate with Japan 'in the development, re-cycling and re-use of rare earths and metals in research and development of their substitutes.'

Indiafor its part has an active government-controlled rare earth sector that's operated mostly for strategic purposes. Indo-Japanese cooperation on rare earths would therefore take the Indian rare earth sector into new areas and it seems likely the Japanese model of encouraging private players to operate as vertically-integrated entities in the sector may also find favour in India. In return, India could likely benefit from Japanese technology that would, for example, prove invaluable in extracting rare earths from monazite sand along India's coastline.

Japan isn't the only country that has grown concerned about China's dominance over metals that are not just vital for industry, but also in many cases for national security. South Korea has indicated that it intends to cut its dependency on China and will be co-coordinating with Japan to look at other countries with rare earth deposits; it's likely that India will emerge here too as a prime candidate.

Eoin Treacy's view Thanks to a subscriber for this interesting article by Saurav Jha for The-Diplomat.com. Here is a section:

But the earliest new supply of rare earths for Japan could end up being India. Toyota Tsusho Corp. is reportedly set to start building a refining plant in India's eastern state of Orissa, possibly as soon as the end of this year. The refinery is expected to go online next autumn with an annual capacity of 3000 to 4000 tons of mineral ores for export to Japan. Such a deal sits well with the pledge by Indian Prime Minister Manmohan Singh on his just concluded trip to Japan, during which he agreed to co-operate with Japan 'in the development, re-cycling and re-use of rare earths and metals in research and development of their substitutes.'

Indiafor its part has an active government-controlled rare earth sector that's operated mostly for strategic purposes. Indo-Japanese cooperation on rare earths would therefore take the Indian rare earth sector into new areas and it seems likely the Japanese model of encouraging private players to operate as vertically-integrated entities in the sector may also find favour in India. In return, India could likely benefit from Japanese technology that would, for example, prove invaluable in extracting rare earths from monazite sand along India's coastline.

Japan isn't the only country that has grown concerned about China's dominance over metals that are not just vital for industry, but also in many cases for national security. South Korea has indicated that it intends to cut its dependency on China and will be co-coordinating with Japan to look at other countries with rare earth deposits; it's likely that India will emerge here too as a prime candidate.

My view - Rare earth metals have become a "cause celebre" for speculative investors as China's dominance of the market has gained column inches. Related shares rallied spectacularly this year and many entered a corrective phase in late October; having become overextended relative to their respective 200-day MAs. This story has the hallmark of a theme which still has further to run and reactions towards a trend mean such as the MA can be regarded as relatively favourable medium-term entry points for risk tolerant investors.

Some of the leaders have unwound their overbought conditions and are beginning to find support above or in the region of their 200-day MAs. Neo Materials Technologies and Tasman Metals are both hitting new highs. Lynas Corp, Alkane Resources and Quest Rare Minerals found support in the region of their 2008 peaks earlier this month., Arafura Resources, Avalon Rare Metals, Matamec Explorations, Hudson Resources, Ucore Rare Metals, 5N Plus and Greenland Minerals and Energy have all found at least short-term support in the last couple of weeks and would need to sustain moves below their 200-day MAs to question medium-term upside potential. Also see Comment of the Day on November 16th.