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TGR: One ton?

JL: One ton. Now the U.S. installed capacity for electric power production is 1,000 gigawatts, which is 1 million megawatts. So, to replace America's capacity with wind would require 1 million tons of neodymium. At current world production, that would take around 50 years—if there were no other uses for neodymium. Clearly this isn't going to happen.

We can produce only so much of any material in a given year. Last year marked the highest production of base metals in history. We produced 39 million tons of aluminum, 16 million tons of copper and 1.3 billion tons of steel. Unfortunately, there's not much in the way of by-products from iron, but copper and aluminum production account for almost all of the minor metals—gallium, molybdenum, rhenium, selenium and tellurium. If the world economy declines and we don't reach those peaks again, then we've already peaked in the production of those metals. The uses are mainly dissipative. We lose them. It becomes uneconomical to recover them by recycling, so we're going to have to get along in a world where we use less, which means any industry planning on increasing production based on those metals is in big trouble. One of them clearly is solar.

TGR: Because we're putting on our investor hats, it sounds like in order to move forward with the whole thing on hybrid cars, solar. . .a whole variety of technology, either we need to invest in China or in base metal production.

JL: Correct.

TGR: Do you foresee a situation in which a Prius is going to cost some ungodly amount because the rare metals used in the car are exponentially expensive?

JL: That's what Toyota is worried about. The world production of cars this year was supposed to be 70 million units, so now it's going to be 60 million due to the downturn. But the projection for 2015 is 125 million cars built, including 20 million just from China—which, by 2015, will not be only the world's largest producer of automobiles but the largest producer in the history of automobiles.

China's developing huge industries utilizing these materials, which it currently controls like rare earth metals. And as those industries build, we're seeing the export of these metals sharply reduced. Can we really live without magnets for small motors? Just remove everything that's got a small motor in it (a cell phone, Blackberry, etc.), and you'll see why we really need the rare earth metals from China.

I happen to know the Japanese trading companies have approached SQM (NYSE:SQM)(Santiago Stock Exchange: SQM-B, SQM-A)(Sociedad Química y Minera de Chile S.A.) in Chile to talk about locking up some lithium supplies because they are concerned that Japanese car companies will need lithium. If you could name one American trading company that's ever bothered to think about that, I'd be shocked. The people I know in Chile told me that, about a year ago, Japanese delegations started showing up talking about exotic metals for the first time. Japanese and Chinese companies have already bought into Chilean mining operations. But aren't you guys mainly interested in gold?

TGR: Oh, no. We do precious metals, base metals. In fact, we think some of the more interesting plays are going to be in rare earth. We have been hearing more about the mineral tantalum? What is it used for?