Chinese Rare Earth Explorers Positioned to Benefit From New Regulations

  It is estimated that China holds about 30 per cent of the world's rare earth deposits, but accounts for over 95 percent of global production. Demand for the metals is expected to surge going forward, as the elements are an integral part of modern technology. The Bedford Report examines the Rare Earth Elements Industry and provides research reports on China GengSheng Minerals, Inc. (NYSE Amex: CHGS) and China Shen Zhou Mining & Resources, Inc. (NYSE Amex: SHZ). Access to the full company reports can be found at:

www.bedfordreport.com/2011-04-CHGS www.bedfordreport.com/2011-04-SHZ

China's Land and Resource ministry recently announced that it would not approve any new prospecting or production licenses for rare earths, tungsten or antimony until June 30, 2012. China has begun to impose more discipline on its rare earths industry with a series of policies aimed at cleaning up the sector. The country has already cut export quotas by 35 percent for the first half of 2011.

Chinese officials have explained that such high levels of rare earth production are not environmentally sustainable, and that China needed to retain supplies for domestic industries.

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Xiaojing Yu, Chairwoman and CEO of China Shen Zhou Mining & Resources, says that the company is "well positioned to benefit from the new regulations and policies." China Shen Zhou Mining & Resources recently posted record profits as a result of surging rare earth prices. Last month the company reported a four-fold jump in revenues in the fourth quarter of 2010. The gains were driven by higher commodity prices and higher processing of a larger amount of fluorite ore in the fourth quarter.

For its fiscal fourth quarter China GengSheng reported a 21.8% year-over-year revenue improvement to approximately $18.6 million. The increase in revenue was mainly attributable to increased export sales from the company's fracture "proppant" segment as well as contributions from fine precision abrasive products.

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