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Neodymium, the new oil?

Anyone who had half a clue would have bought neodymium futures a while back.

Why's that?

Well as we head away from fossil fuels and towards a future where electricity is the predominant energy source for just about everything, neodymium will become one of the most valuable materials on the planet.

So what is neodymium?

Well it's the stuff that super-strong rare-earth magnets are made from -- the kind of magnets at the heart of many of today's ultra-efficient and powerful electric motors.

So how much money would you have made if you'd invested in neodymium futures a little while back -- as I hinted in this column way back in 2009?

Well now check out this information and weep -- if you didn't invest.

From a price of around US$100 per Kg at the start of the year, the price of this rare-earth metal has now soared to an astonishing US$400 per Kg.

Chances are that this trend will continue, for as long as demand grows.

However, it's not just demand that is driving the price -- apparently the Chinese government has begun taxing the mining of this material and this has also contributed to recent hikes.

Then there's the issue of "value-add"...

China is rapidly waking up to the fact that it has the world's largest reserves of neodymium and that to export it as a raw material would be folly. They are now looking to conserve their supplies and focus on processes and manufacturing that produces products for which the metal is an essential component.

Why sell neodymium for US$400 per Kg when that amount of the magic metal will effectively allow you to manufacture US$40,000 worth of hi-efficiency electric motors?

The worrying thing is that China may soon hold the keys to the electric transport revolution.

Just as many Arab states have a strong influence on the price of crude oil (even though it is found elsewhere in the world), China is setting itself up to be a similar power in the 21st century economy -- where powerful and highly efficient electric motors will become ubiquitous.

So, if you've got a bit of coin lying around down the back of the sofa, maybe now's the time to spend up on some neodymium futures.

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