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Rare Earth Industry Will Help Rebuild Japan

In addition, there's a good chance that some U.S. nuclear plans will be scrapped in the wake of the Japanese crisis. Especially if the situation continues to deteriorate and large amounts of radiation are released.

Just the fear of that happening has refocused the world's attention on power sources like wind, which, while more expensive, carry little or no risk to humans or the environment.

And that will amp up demand for rare earths in the process.

It remains to be seen how much this increase will affect China, which has recently been very vocal about its continued increase on export limits of rare earths. But last Wednesday, the laughably long-winded Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co Ltd, the world's largest producer of rare earths, announced plans to almost double its output of rare earth magnets to 10,000 tons by 2015. That would also double its market share. Here are a couple of other ways to play rare earths:

Consider Molycorp, Inc. (MCP - Get Report). It's a development-stage rare earth company, based in Colorado. It plans to start a new wave of mining this year and is currently processing stockpiled ore from a previous mining operation on its site.

Australian rare earth producer Lynas Corporation (LYSCF) is another way to play the sector.

So while shares of rare earth producers are down since the Japan disaster, with nearly limitless demand, investors would be wise to have some exposure to the sector, since that demand will come from a multitude of sectors. Companies outside of China are clearly a good bet -- and right now, they're all on sale.

This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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