Over on the Strategic Sourcerer, there's a quick summary of the latest supposed move by China regarding rare earth metals. The post notes that "China's unofficial [emphasis added] embargo of rare earth metals to Japan seems to have ended" and that "Japan's ministry of economy, trade and industry said ... that out of 27 companies procuring rare earths from China, 16 reported in a survey that it was easier to purchase them." I asked MetalMiner's Lisa Reisman to comment on this news and she suggested "the Chinese would argue there was never an embargo in the first place." "More than a year ago," Lisa continues, "China announced it would curb its rare earth metal exports because of rising domestic demand and would claim the recent export shortages had nothing to do with specific policy changes."

Yet the implications of the alleged -- if not proven/acknowledged -- embargo has been "to in effect, cause the entire world to develop its sourcing strategies around rare earth metals and think about long-term alternatives to China," Lisa suggests. One country that stands to gain the most as companies have begun to reexamine their dependence on Chinese sources of rare earths stands North of the border -- the US border to be exact. Lisa opines, "a segment of the market that stands to benefit greatly is the Canadian market because they have among the most resources and lowest demand. They are the ones who can most offer their wares to the rest of the world without worrying about domestic requirements."

Another trend Lisa has observed is that a "flurry of Asian (not Chinese) companies are looking at investments and related off-take agreements with mining and junior mining companies. Lynas, an Australian mining firm, recently put in place an off-take agreement to sell critical capacity to a Japanese trading firm." In summary, Lisa argues that what "China has done whether intentional or unintentional is exactly what the industry has needed. It's always good to not become dependent on a single region or single supplier as we have with China and rare earths. There are other resources and avenues out there and now companies are beginning to explore them. No one should be reliant on a single country, especially one where the state calls all the digging shots."

Jason Busch