Could Afghanistan provide the answer to the little known phenomenon of the ‘Rare Earth Bubble’.

According to many there is a danger that China, where 97% of the world’s supply comes from, may stop exporting rare earth elements by 2012.

These elements are essential to our modern way of life in that they make mobile phones, computers, televisions, powerful magnets, hybrid cars, wind turbines as well as night vision goggles, missiles and other military paraphernalia work.

Without them our way of life could just grind gradually to a halt.

Just look at the current price for one ton of unprocessed ore – $100,000 – to see how important rare earth elements are. There are 17 REEs, which are considered as the fourth most important natural resource on the planet.

The elements themselves are really metals and are actually more abundant than gold and can be found all over the world, but only in minute concentrations making them very difficult to mine effectively. It is the large concentrated deposits that the world needs.

And as China increases its own industrial base it needs more and more rare earth elements for internal use.

So it comes as good news that Afghanistan is rich in rare earth elements. Not only does it give the west access to another source of materials it also gives the Afghanistan government something other than drugs to peddle.

That Afghanistan is rich in minerals has been known since about the time of the Soviet invasion in late 1979. But this latest discovery adds more to the mix.

But as John Daly says, there are still many problems to overcome. The first is the thirty odd year ongoing civil war. The second is that many view the current regime as an illegitimate foreign patsy. The third is that to get at the elements would require military protection. The fourth is that as prices rise the world is being scoured for new sources and this may be a better investment than trying to exploit a potential flashpoint.

As John Daly of oilprice.com says “So, even though Afghan Ministry of Mines adviser Jalil Jumriany said of the REE discoveries, “This will become the backbone of the Afghan economy,” the question, not only for foreign investors but the Afghans themselves remains, “qui bono?”

There are no clear answers emerging to this question from Kabul anytime soon.”

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