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 Reports and Commentary from the Investment World

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Greenland Minerals and Energy Ltd


Greenland Minerals (GGG.ASX)

The rare earth landscape is at a point of radical change. China is turning its priority from supplying the world, to supplying the burgeoning demand from its internal industries. Beijing is drawing up plans to prohibit or restrict exports of rare earth metals that play a vital role in cutting edge technology, from hybrid cars and catalytic converters, to superconductors,

The World could face a hi-tech crunch if China does put a  ban on its rare metal exports, because China currently mines over 95% of the world’s rare earth minerals. The move to hoard reserves is the clearest sign to date that the global struggle for diminishing resources is shifting into a new phase. Countries may find it hard to obtain key materials at any price. The world drastically needs new suppliers of rare earth elements. We believe we have found one!  Venture capitalists, hedge fund managers, and resource companies from all over the globe are watching and waiting, ready to pour billions into Greenland once they get the green light.  We can get in ahead of the pack by buying shares in a smal Aussie company.

Most people are now familiar with hybrid vehicles, rechargeable batteries, Blackberries, iPods, mobile phones, TVs, navigation systems, plasma and LCD screens, laptop computers, disk drives and catalytic converters. However; it is not widely known that these products are dependent on the unique properties of rare earth metals.  Lanthanum for example is used to make rechargeable batteries for hybrid cars and neodymium is used to make magnetic motors for hybrid cars and cameras. No replacement has yet been found for neodymium, that enhances the power of magnets at high heat and is crucial for hard-disk drives, wind turbines, and the electric motors of hybrid cars.  For example, each Toyota Prius uses 25 pounds of rare earth elements. Cerium and lanthanum are used in catalytic converters for diesel engines. Europium is used in lasers. Other rare eath minerals are used as filters to remove bacteria from water.

Rare Earth Elements (REEs) are a group of specialty metals with unique physical, chemical and light-emitting properties that are seeing dramatic increases in demand, owing to their  technological applications. The unique properties of REEs make them critical materials to many emerging technologies which are becoming increasingly commonplace in today’s society.  While global consumption has been steadily increasing, supply of REEs has tightened dramatically.

The REE group is considered to include the 15 lanthanide elements: lanthanum, cerium, praseodymium, promethium (does not occur naturally), neodymium, samarium, europium, gadolinium,
terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium. The elements yttrium and scandium are also included as they have similar chemical properties, making 17 REEs in total.

New uses for these rare earth elements are emerging all the time, and some promise quantum leaps in efficiency. The Tokyo Institute of Technology has made a breakthrough in superconductivity using rare earth metals that lower the friction on power lines and could slash electricity leakage. The Japanese government has drawn up a “Strategy for Ensuring Stable Supplies of Rare Metals”. It calls for
`stockpiling’ and plans for “securing overseas resources’.  Obviously, some nations have already recognised the supply and demand problem that is emerging regarding rare earth minerals. Global consumption of rare earth metals has been steadily increasing and supply has tightened dramatically. This is where we see a huge window of opportunity.

A smal Australian company, Greenland Minerals and Energy, has access to what it says are probably the world's largest deposits of rare earth metals. Greenland Minerals and Energy Ltd is a rare earth elements, uranium, lithium, beryllium and zirconium exploration company with projects in Greenland. The company has acquired through a joint venture,an option to acquire up to 100% of the Kvanefjeld Project which is located partly within the Ilimaussaq Complex, SW Greenland.  The company has recently started to gear up to take full advantage of the shortage of these minerals. Greenland Minerals is already listed in Australia and it plans to list in London next year. Before the company makes its debut in London, Denmark has to hand back to Greenland, ownership of the country's resources. The laws allowing Greenland to take ownership of its oil, gas and minerals from Denmark were passed on June 21st, 2009 with the settlement date set for January 1st, 2010. So, all the prerequisites are in place to allow Greenland Minerals to start extracting the rare earth minerals from it's Kvanefjeld project.

The economic and strategic significance of the resource at Kvanefjeld is only just starting to be understood. This is an ore body that is showing indications of being approximately 40 square
kilometres of mineralised material. Kvanefjeld could end up suppling  25% of global rare earth minerals demand. If all goes well for the company, the profits could be immense.

In the last few months the company has made a number of high profile appointments to its board -  former Prime Minister of Greenland, Lars Emil Johansen has been taken on as Chairman, Mike Hutchinson the former head of The London Metals Exchange and prominent Greenlandic businessman Ole Ramlau-Hansen have also been appointed. These appointments are of strategic importance and will certainly help to smooth the path to a successful outcome for the development of the Kvanefjeld project..

While there exists a perception that Greenland is remote, and logistically challenging, the Kvanefjeld site is close to a deep water port and they forsee no problems exporting the minerals. In addition, Greenland is strategically located between North American and European markets.

There are still some political obstacles to negotiate, but it would appear that once Greenland is back in the driving seat, the country will move ahead with its biggest commercial opportunity - rare earth mineral extraction.

With an exploration and mining company, you should expect plenty of volatility in the share price, but the potential upside here is huge.

Buy Greenland Minerals (GGG:ASX) up to AU$0.65


Disclaimer: All the information above is provided as a service for individuals and institutions. It should in no way be construed as a recommendation as an investment. Investment decisions should be based on the risk tolerance and planning horizon of the investor. Market participants must understand that past performance is also not a guarantee or predictor of future results.