In 1992, Deng Xiaoping, a veteran of the Chinese Communist Party, said: 'The Middle East has its oil. China has rare earths.' Back then, few people cared. Today, many do, including governments and businesses around the world.
Rare earth metals can be found in products as varied as earphones to air conditioning units and they are increasingly in demand as the world tries to become cleaner and greener.
China accounts for more than 75 per cent of global rare earth production and 95 per cent of refining and processing. Not surprisingly then, the West is keen to reduce its reliance on China, but alternative producers and processors are thin on the ground.
Power play: Rainbow Rare Earths is a major producer of neodymium, used in millions of earphones
Rainbow Rare Earths is an exception to the rule. The company is shaping up to be one of the largest producers outside China of two key rare earth metals, praseodymium and neodymium.
These form the basis of a compound called NdPr oxide, the price of which has tripled in less than two years, from $40,000 per ton to $115,000 (£86,000) per ton. Some forecasters suggest the surge will continue because both rare earth metals are critical components of wind turbines and electric cars.
Rainbow has two rare earth projects, one in Burundi and the other in South Africa. Today, the Burundi mine is in hibernation, while the South Africa site is in development. Even so, Rainbow's share price has risen more than 30 per cent to 13p over the past year and analysts believe the stock should triple over the next couple of years.
Investor excitement centres on the South African project in Phalaborwa, just next to the Kruger National Park. Home to a phosphate mine for decades, the site spawned two stacks of gypsum residue, each more than 1,000ft long and 200ft high. They contain traces of praseodymium and neodymium, alongside other valuable rare earth elements. Normally, these elements are extracted from ore. In Phalaborwa's case, they will be extracted from the gypsum stacks, a process that will cost far less than conventional mining and, crucially, will not deliver clumps of unprocessed metals that will need to be separated out in China.
Costs will be relatively modest because there will be no need for expensive underground drilling and the project is not subject to South African mining regulations because it is considered a chemical processing operation rather than a mine.
There are green benefits too, because Rainbow will be cleaning up the gypsum as part of the rare earth extraction process, creating a material which could easily be sold to construction companies.
The site should be up and running by 2024 and annual revenues of up to $250million are forecast, with underlying earnings of at least $100million a year.
Even as Phalaborwa moves towards production, the Burundi project is likely to come back on stream.
Historically, the Burundi government has been entitled to 10 per cent of local mining projects, but it is keen to secure more favourable terms so halted all mining operations in the summer of this year. A compromise is expected next year, with politicians likely to demand somewhere closer to 15 per cent of the Burundi mine.
Even at that level, the site has plenty of potential as it is rich in praseodymium and neodymium and around 450 tons of ore is already sitting on site waiting to be processed, a move which alone will generate around $1.5million of cash.
African mining projects have a chequered track record on the stock market.
However, Rainbow is run by George Bennett, an investment banker turned mining expert, with a near 20-year history of successful projects to his name and an experienced team behind him.
Midas verdict: A mining company that is making no money, wrestling with political issues and unlikely to deliver meaningful profits for several years may seem a foolhardy investment. But Rainbow Rare Earths is in the right place at the right time. Demand for rare earths is growing, Rainbow can help reduce the world's reliance on China and Bennett knows his game. At 13p, the shares are worth a punt.
Traded on: Main market Ticker: RBW Contact: rainbowrareearths.com or 00 27 82 652 8526