REFILE-Neo Material CEO sees price bubble for rare earths

Wed Sep 15, 2010 3:35pm GMT

(Fixes name in headline to Neo Material, not Materials)

* Sees China relaxing export quotas, re-flooding market

* Says critical shortage in heavy rare earths, not lights

(In U.S. dollars unless noted)

By Julie Gordon

TORONTO, Sept 14 (Reuters) - A price bubble has developed in the market for "rare earth" metals used to build components for the iPhone, electric cars and a range of other products, raising the prospect of a steep decline, the head of Canada's oldest rare earth operation said.

Such scenario could derail the economics of developing new mining projects designed to ease the current supply crunch, said Constantine Karayannopoulos, chief executive of Neo Material Technologies NEM.TO.

"At the end of the day, rare earths are not that rare," he said in an interview. "Bubble economics aside, there just isn't enough value in the ground to justify digging the stuff up and processing it."

China, which produces over 90 percent of the world's supply, is chopping exports by almost half this year, creating a big gap in the supply needed to meet a surge in demand as green technology goes mainstream.   Continued...

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