A new mine in California is almost unheard of. We must take our hats off to Molycorp for the reopening of, dare we call it the “new?” Mountain Pass mine in California. Any group of people who can pull that off, must have skills and resources beyond the ordinary. More the pity it is being done by private investors and the rest of us will have to queue to buy shares if ever they go public.

They have a persuasive case for opening the mine, if the many press reports are to be believed. The mine will produce rare metals that are needed to make batteries for electric cars. China holds most of the world’s current resources and is threatening to cut off supplies, thereby making us all buy Chinese batteries for our new electric cars. Luckily the mine being reopened has operated since the 1940s in a very dry and hot part of California close enough to Las Vegas to make that a more attractive living alternative. There is a classic symmetry in the idea that “green” California, reeling from economic meltdown, should now be the location of a mine that saves the USA from Chinese economic domination while enablingCalifornia topursue environmental correctness.

The story of the Mountain Pass Mine (its success to date) holds some lessons and pointers. First, if the USA really needs the product mined, it will do so. Is it too much to conclude on the basis of this one instance that mining is not dead in the USA, only selective? Is it too much to ask if part of a vigorous free-market economy is the fact that mining should be done elsewhere than the home country if the product produced elsewhere is cheaper - and production elsewhere poses no national interest threat?A better example of this principle in operation: why mine oil shales in Colorado when Alberta has hardly tapped the oil sands?

Next the story of Mountain Pass Mine reminds us as investors in mining that we should keep a close eye on what the private investors are doing. As in this case, they obviously have the skills and cash to achieve the impossible—open a mine in California & persuade the country it is the right thing to do. And to produce metals that promise days of clean air and national independence. It is brilliant.

As investors we can but put them on our wish list, watch list, and seek out others who may be able to emulate them. But beware: the promise is so enticing, the temptation to scam and fraud is so great, that it will be a wonder if somebody does not cook up a scheme to help you part with your money. Thus these Investment Rules:

Investment Rule 101: Watch (and try to emulate) the well-healed private investor.

Investment Rule 102: Watch too much enthusiasm for promise of future perfection–it may take a long time to get there.