Unleashing the Power of Rare Earth Metals for Investments

China controls the global supply of heavy rare earths through both domestic extraction and access to international processing facilities. Beijing also holds onto all necessary technology, equipment and capacity required for separation processes.

Idealistically, the United States should possess an increased production capacity for rare earths such as neodymium and praseodymium - although such an achievement might take years.


As demand for rare earth elements continues to soar due to hybrid and electric vehicle sales, renewable energy technologies, and green technologies, mining and processing companies will face an opportunity. Unfortunately, due to being produced only in select countries they may prove challenging to acquire at economically profitable prices.

Heavy rare earth elements, including lanthanum, cerium, praseodymium and neodymium as well as europium, terbium and dysprosium (USGS 2021), are harder to locate in deposits which make mining economically feasible; transport and processing also costs may add an additional burden.

Tahuti Global reports that Chinese firms currently dominate global production. This can be partly attributed to China's reentry into global trade after 1976 when leader Deng Xiaoping made efforts to restore domestic prosperity while strengthening Communist Party control without risking political instability.

Although REE supply will likely exceed demand as we move toward more eco-friendly technologies, magnetic REEs such as neodymium and praseodymium will likely become even more in demand as more sustainable technologies emerge. This trend can be attributed to their use as motor components for electric vehicle batteries and hybrid battery systems as well as magnets used for wind turbines and MRI scanners requiring this metal. Investors interested in investing in this sector could purchase shares or mutual funds that specialize in it.



As global demand for hybrid and electric vehicles, green technologies and other high-tech uses increases, so will rare earth minerals prices. Investors would be wise to investigate companies which mine or process these valuable resources as opportunities exist for investors to capitalize.

U.S. companies were once dominant producers of rare earth elements, but China soon started taking control in the 1980s through cheaper extraction methods and more permissive environmental destruction practices (a Los Angeles Times reporter once described a lake of radioactive black sludge at one Chinese mine). Still, rare earth elements are considered critical materials by both governments and Trump administration exempted them from tariffs on $300 billion worth of Chinese imports.

Concerns remain regarding China's dominance, particularly as tensions over trade increase and it seeks to restore its own capacity for processing these valuable metals. MP Materials is one such company; after merging with Molycorp last year and going public last year as MP Materials Inc, its Mountain Pass facility in California should restore domestic refining and separation capabilities by 2025; MP also plans on investing in additional refinery capacity elsewhere in its network.

Always bear in mind, though, that mining and extraction can have significant environmental impacts; investors must carefully consider both environmental risks as well as potential returns when investing in rare earth miners. Furthermore, unlike precious metals like gold and platinum, rare earths typically do not trade on the spot market but instead are purchased through long-term contracts from suppliers.



Rare earth metals may be inherently illiquid and subject to price volatility, making investing difficult. Investors should keep this in mind as mining companies can often operate in secrecy; new mining firms may take years before beginning production of rare earth elements - often, small retail investors won't even hear about any changes until long-term contracts with companies build products using rare earths have begun.

Investors can gain exposure to rare earths by purchasing shares of mining companies or exchange-traded funds that specialize in them, like VanEck Vectors Rare Earth/Strategic Metals ETF (REMX). Other options for investors interested in rare earths include investing in companies that recycle rare earths or provide processing services; examples include Metal Tech Recycling Corp (NASDAQ:MTRX) and American Resources Corp (NASDAQ:AREC), both producing recycled rare earths.

The United States has made several attempts over time to become a leading player in rare earths supply chains that are essential to electric vehicle batteries, green energy systems and technology manufacturing. Under President Biden's administration these efforts have received renewed focus. It would be difficult for the US to compete against China's 61% market share without undertaking massive investments into new production lines as well as being willing to address geopolitical tensions head on.


As with other metals, rare earth minerals are an invaluable asset that can serve many different functions. Unfortunately, their rarity makes them expensive - for instance yttrium oxide only sells for around $3 per kilogram while praseodymium oxide costs closer to $50,000 per kg - not to mention that their mining and extraction are often not sustainable practices so when investing in these rare resources make sure you consider its impact on our planet when making decisions about investment decisions.

Though rare earth metals can be purchased physically, most companies that work with them prefer purchasing directly from producers on long-term contracts, making it hard for investors to access small quantities quickly and conveniently. Mining companies that produce rare earths such as MP Materials (MP) and Texas Mineral Resources (TMRC) offer investors a better route; both have become national leaders in making America self-sufficient through Round Top Mountain in Texas housing the highest grade rare earth ore found anywhere.

Due to rare earths not trading on an exchange, there are no physical futures that can be tracked with ETFs or ETNs; however, one popular choice for investors interested in this industry is VanEck Vectors Rare Earth/Strategic Metals ETF (REMX).

Unleashing the Power of Rare Earth Metals for Investments