The metals (or elements) of rare earths contain a total of 17 elements, including the chemical elements of the third subgroup of the periodic system (except for actinium) and the lanthanoids. Rare-earth metals, as they are referred to in inorganic nomenclature, are a group of chemically similar elements. They are widely distributed but are present mostly in very low concentrations. Rare earths are therefore difficult to produce, which is also why they are “rare”.
In the Earth’s crust, some of the rare metals (cer, yttrium, and neodymium) are more commonly present than chromium, nickel, copper, or zinc. The rarest metals, thulium and lutetium, are 200 times more common than platinum or gold. In contrast to base metals and PEG metals (PEG, i.e., polyethylene glycol, is a liquid or solid, chemically inert, water-soluble, and non-toxic polymer), the rare earth is hardly or not present in degradable deposits.
Presence and Use of Metals
China, Brazil, Vietnam, Russia, India, and Australia are the main sites. The most famous mines for rare earth mining are Bayan Obo in China, which accounts for 50% of Chinese production, Mount Weld in Australia and Mountain Pass in California. However, the main mining regions are still China, Malaysia, and Thailand, with China being the market leader in terms of natural resources, stocks, and extraction. Of the 240,000 metric tonnes exported worldwide in 2020, almost 60% belong to China. The United States is second with 38,000 metric tonnes.
The purpose of use depends on the metal. Each has its own characteristics. For example, neodym produces powerful magnets that are used in computer hard drives, speakers, wind turbines, and hybrid cars. It is used for the production of catalysts. Cer and lanthan are used for the refining of crude oil.
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Overall, there is a surprisingly wide range of applications for rare earths. They can be found in a variety of devices, from electric tools and mobile phones to electric vehicles and rockets.
The Price of Rare Earth
Although the topic may not be the most discussed on Wall Street, it appears to be increasingly common in the post-pandemic economy. The reason for this is simple: rare earths are crucial to the production of existing and new technologies, and currently there are not enough of them. It is also important to keep in mind that so-called rare earths go far beyond technology and finance. They are an object of international trade and politics, which can be deterring and difficult for some investors. The share price of a mining company differs from the spot price of the metals it cultivates and produces. One can go up, while the other can go down, depending on how well the company runs and how much metal is demanded.
According to Statista, an international provider of market and consumer data, the average price of selected rare earth metals from China this year was as follows (the price in USD per kilogramme): terbium 2.282, dysprosium 430,35, praseodymium 161,43, neodym 129,79, and yttrium 36,87. For comparison, the price of gold moved around 63,000 USD.
The price of rare earths varies, as opposed to traditional assets such as stocks and bonds. Rare earths are scarce and in high demand.
The technology-related industries will most likely continue to use rare earths. However, rare earth markets can be very volatile as they are illiquid. Moreover, some large and sometimes impenetrable mining companies have strict control over these raw materials.
Investing in a market that is far ahead of the general public has its advantages, especially when this investment is focused on scarce raw materials and new technologies. But it also carries the risks that each emerging market or industry involves. The rare earth market is no exception.
