Interview With The President: U.S. Rare Earths, Inc. (UREE) - Daniel McGroarty
April 17, 2012 - The Wall Street Transcript has just published Building Materials, Construction and Housing Report offering a timely review of the sector. This Special Report contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. Please find an excerpt below.
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Daniel McGroarty has been the President of U.S. Rare Earths, Inc., since 2010. He is also the Principal and Founder of the Carmot Strategic Group, a Washington, D.C.-based issue management consulting firm. Before establishing his consultancy, Mr. McGroarty served at senior levels in the U.S. government as Special Assistant to the President in the White House under George H.W. Bush, and as Presidential Appointee to two Secretaries of Defense. Mr. McGroarty serves as Adjunct Professor in The Graduate School of Political Management at George Washington University. He is a contributing Columnist on geopolitical issues at RealClearPolitics' RealClearWorld page.
TWST: Please give us a brief summary on U.S. Rare Earths, and tell us what the company is doing today.
Mr. McGroarty: U.S. Rare Earths (UREE) began as a public company in December 2010. At that time, we were known as Colorado Rare Earths. At that time, Colorado Rare Earths had claims in the state of Colorado and was engaged in the exploration and development of those claims, looking to bring rare earths into production in response to growing global demand for REEs. By mid-2011, Colorado Rare Earths entered into discussions for the acquisition of a privately held company called U.S. Rare Earths. U.S. Rare Earths had properties in Idaho and Montana, which had strong showings of the rare earth metals, and also of thorium, another strategic metal of interest. That acquisition was completed in the fall of 2011. At that point, the combined company, having properties now in three states, took the name U.S. Rare Earths and is trading on the OTC under ticker symbol UREE. Within our first year, we brought into the company different properties across three states that we were very interested in given the historic data and indications that they had a strong presence of the rare earths. Our task was then to continue to explore and develop and prove up those resources, which is what we've been doing since then. We had a drill program in the field in Colorado in 2011. Moving quickly after the closing of the acquisition, we got an aeromagnetic study up over the Idaho and Montana claims, collected some surface samples from the Idaho and Montana claims. With all of those pieces under analysis, we are going to use the resulting data to guide our drill program for 2012, prioritizing across our different properties.
TWST: Looking at the overall domestic rare earth industry you work in, what do you see as the dominating or prevalent trends over the next two or three years? And of those, which are positive and which are cautionary with respect to U.S. Rare Earths and its long-term goals?
Mr. McGroarty: The biggest issue, on a global basis, is that the rare earth sector has been dominated in terms of production by the Chinese. Then, you add on the fact that the technology advancement is coming up on an almost daily basis with new uses for rare earths - in wind power, solar photovoltaics, CFL light bulbs, electric batteries, both the electric batteries that we look at for automobiles, but also if you think about miniaturization, maybe the e-bicycle, which could be brought out to billions of interested consumers and potential consumers in the developing world - and then, of course, on the national security side, the need for rare earths in advanced weapon systems, Tomahawk cruise missiles and satellite guidance systems. Finally, add that China is growing rapidly itself, and consuming increasing amounts of rare earths as it scales up its own green-tech and high-tech sectors - and you can see how non-Chinese companies and national defense sectors would be growing increasingly uncomfortable about their REE reliance on China. All those things point to the need for domestic supply of rare earths. That's what Colorado Rare Earths, and now, U.S. Rare Earths, is all about. Demand is such that a single company is not going to suffice to provide all of the new supply that's necessary, so we are very excited about being able to be in the REE space. We think it's the perfect time to be bringing the mine forward and developing a new domestic REE resource in the United States.
TWST: The U.S. government, along with Japan and the EU, has instituted a WTO action aimed at China's rare earths export policies. How do you see this action impacting the REE sector?
Mr. McGroarty: The WTO process is a long and involved bureaucratic path, and I don't know of any mining company that would modify its behavior in hopes of some positive WTO ruling. In general, I'm not a big believer that the industrialized nations currently dependent on Chinese REEs can litigate their way to a more certain, market-priced supply out of China. Where nations are fortunate enough to have REE resources to develop - as in the case of the United States - that's what they should do. That's the real solution to the dependency problem. For U.S. Rare Earths, we're moving to meet demand and provide domestic supply. If and when the WTO injects more transparency and fairness into the global resource regime, we'll benefit from that as will everyone else. But in the meanwhile, we're working to solve the supply problem.
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