So Much for "Peak" Rare Earths: "Japan breaks China's stranglehold on rare metals with sea-mud bonanza"

I exaggerate. Back in 2010 no one was talking "Peak" neodymium. They were just acting as if it were Peak neo. Equities and metals ran 10 and 20-fold.
Good times.

...Words like "uranium", "rare earths", etc. seem to be magic to

 those unsuspecting who are often fleeced...

Gerald M. Loeb

The Battle for Investment Survival

Simon & Schuster, 1935

From The Telegraph:

 Japanese scientists have found vast reserves of rare earth metals on the Pacific seabed that can be mined cheaply, a discovery that may break the Chinese monopoly on a crucial raw material needed in hi-tech industries and advanced weapons systems. 

The team have found deposits just two to four metres from the seabed surface at higher concentrations than anybody ever thought existed.

"We have found deposits that are just two to four metres from the seabed surface at higher concentrations than anybody ever thought existed, and it won't cost much at all to extract," said professor Yasuhiro Kato from Tokyo University, the leader of the team.

While America, Australia, and other countries have begun to crank up production of the seventeen rare earth elements, they have yet to find viable amounts of the heavier metals such as dysprosium, terbium, europium, and ytterbium that are most important.

China has a near total monopoly in the heavier end of the spectrum, though it is also the dominant supplier of the whole rare earth complex after driving rivals out of business in the 1990s. It still accounts for 97pc of global supply.

Beijing shocked the world when it suddenly began to restrict exports in 2009, prompting furious protests and legal complaints by both the US and the EU at the World Trade Organisation. China claimed that it was clamping down on smuggling and environmental abuse.

"Their real intention is to force foreign companies to locate plant in China. They're saying `if you want our rare earth metals, you must build your factory here, and we can then steal your technology," said professor Kato.

The team of scientists from Japan's Agency for Marine-Earth Science and the University of Tokyo first discovered huge reserves in the mid-Pacific two years ago. These are now thought to be 1000 times all land-based deposits, some of it in French waters around Tahiti.

The latest discovery is in Japan's Exclusive Economic Zone in deep-sea mud around the island of Minami-Torishima at 5,700 meters below sea level. Although it is very deep, the deposits are in highly-concentrated nodules that can be extracted using pressurised air with minimal disturbance off the seafloor and no need for the leaching.

Professor Kato said exploration will continue for another two years before scaling up towards production. Over 50pc of the metal in the deposit is the heavier end of the spectrum, twice the level of China's key mines and without the radioactive by-product thorium that makes the metals so hard to mine....MORE

We have a couple hundred posts on the rare earth mania, here's a grab bag:
Sept. 2010
"Japan Works To Slip China’s Chokehold On Rare Earth Metals"
Oct. 2010
"Japan's rare earth minerals may run out by March" and Japan to Mine Sewage Sludge, E-Waste for Precious and REE Metals
May 2011 
Goldman Sachs: China to Benefit From Rare Earth Prices until Oversupply in 2013 (MCP; REE; AVL)

Okay that wasn't exactly what Goldman said.
In our Jan. 6 post "UPDATED: Rare Earth Mania: What the Heck is Molycorp Worth? (MCP; SHZ; REE; AVL)" I repeated a thought first presented the prior week:

...My short side radar is starting to glow. The perfect play for the Chinese would be to maintain a very tight supply to Japan and the West until MCP, Lynas and REE go into production and then crash the market.
There is currently no way to figure discounted cash flow values for these mines so folks are taking proven, probable and even possible reserve numbers, multiplying by their favorite integer and then forgetting to discount back. That spells opportunity to those panthers sharp enough to wait patiently in the tree until the moment comes to pounce....

July 2011 
Rare Earths: Japan Finds Huge Undersea Deposits; German Industry Dubious; Stocks Droop (AVL; MCP; REE)

Stocks trade generally mournful and reflective.
In early premartket, Molycorp is down, $1.54 (2.57%) at $58.30, Rare Element is down 2.65% at $10.64 and Avalon is down 2.92%
Auspicious update, below.

Nov. 2012
"Prices of Rare Earth Metals Declining Sharply" (AVL; MCP)
Jun. 2012
Japan Makes Huge Rare Earth Find
Nov. 2012
The Rare Earth Bubble Has Burst (MCP)

The thing to remember about bubbles is they don't immediately re-inflate. It seems to take anywhere from a year to a generation....

Good times. 
At the peak of the mania, May 2011, Molycorp hit $79.16. Friday it closed at $5.72.