China was responsible for up to 80% of global rare earth metal production last year - an alarming statistic given that so many nations depend on China for essential tech, military and energy industries.
But investing in essential raw materials such as REEs does carry its own set of risks and rewards; read on to gain more information about these valuable assets.
China once controlled 97% of global rare earth element (REE) production. But when Beijing suspended exports in 2010 due to diplomatic tension with Japan, prices skyrocketed and countries started seeking alternative sources.
Companies are exploring alternative mining techniques, but their success will depend on whether the public and investors back them financially. Furthermore, environmental considerations - including water contamination, land degradation, soil erosion, social disruption, habitat loss - must also be overcome according to Global Witness, an investigative nonprofit which investigates conflicts over minerals. Metal mining is currently the number one polluter in America according to the Environmental Protection Agency.
China is now realizing the full cost of its lax environmental regulations, which have allowed illegal mining operations to flourish and pollution to form acidic run-off, toxic wastewater discharge and potentially hazardous sludge that seeps underground. As a result, their government has increased enforcement of environmental laws as well as started taxing mining operations.
REEs are mined all around the world, but most processing takes place in China. China's separation facilities are an indispensable source for rare earth oxides such as neodymium (Nd) and praseodymium (Pr), used in permanent magnets, specialty alloys and batteries - they're particularly susceptible to supply disruptions which cause price surges when supplies run low.
Numerous nations have developed REE production capabilities, yet each face their own set of challenges. Some countries have taken to employing in situ leaching, which involves mixing chemicals with ore and does not necessitate topsoil stripping. This process reduces environmental impact while increasing recovery rates of rare earths.
Others have taken steps towards recycling rare earth elements (REEs). For instance, the European Union's REE4EU project seeks to recover and recycle rare-earth permanent magnets from hybrid vehicles, wind turbine generators and fluorescent light bulbs to offset the need for new supplies of REEs. Although this approach could eventually reduce mining for REEs altogether, its full implementation is yet to occur on an extensive scale; still in its initial phases.
https://www.loyarburok.com/2011/09/06/understanding-lynas-rare-earth-plant-13-questions/
Rare Earth metals have seen increasing demand due to green technology and advanced optoelectronic devices, and also due to electric vehicle transition. Neodymium-dysprosium magnets are essential components in these vehicles which require powerful magnetic fields that require rare earth metals for proper functioning.
Rare earth elements differ significantly from precious or nonferrous metals in that they are sold on a private market and subject to fluctuations in pricing depending on end-use industries' needs. Due to this price fluctuation, manufacturers often have little room for error when planning projects, leading them down a dangerous path toward loss-making operations or profit making opportunities.
China has emerged as the dominant player in the rare earth industry in recent years, accounting for 60% of global rare earth consumption in 2019. China dominates almost the entire value chain: mining and concentration of raw materials; refining them into oxides; producing magnets. Now China represents 91% of refining activity; 87% of oxide separation activity and 94% magnet production.
There are various strategies available to relieve pressure on rare earth supply, but none is easy. One option would be expanding supply by depending on new mines in Australia, South Africa and Canada under development; however, these could take as much as 10 years and only supplement existing production.
MP Materials' Nd refinery in Mountain Pass, California stands as an example of this approach; their company has made efforts to increase efficiency while cutting energy costs by 20 percent while simultaneously decreasing waste produced during production by 20%.
Thirdly, another way of reducing demand for rare earths is engineering products that use less of them, or find alternatives. For instance, some electric car battery makers have begun designing cars without needing neodymium-dysprosium magnetics in their motors.
Sustainable and socially responsible production of rare earth elements will ultimately depend on consumer willingness to pay more for ethical materials. But in addition to raising demand, mechanisms must also exist both inside and outside governments that ensure REEs are produced with as few environmental and social impacts as possible.
http://prosandconsofinvestingingoldgwwb735.tearosediner.net/making-a-purchase-in-rare-earths
Price spikes result from supply disruption. That was exactly the case this past year for rare earth metals. According to Ryan Castilloux, Managing Director at INN Analytics 2021 witnessed "more major developments than in all seven prior years combined". Notable among these developments were China's coronavirus crisis and border closures which disrupted not only worker movement into affected regions but also critical chemical supplies used for refining rare earth oxides, metals and alloys for refining and production - driving prices skyward ten years high!
China remains the world's leading producer of rare earth elements, but their dominance may have reached their pinnacle in 2010. Following Chinese production's surge to 95% of total world output in 2010, prices for rare earth oxides skyrocketed over 500% over several years and mining companies began reevaluating existing prospects while exploring for new ones.
Today, numerous rare earth projects are underway worldwide; those most promising being located in the US and Australia. Projects like Cheetah Resources' project in Wyoming and Lynas Corporation's one in Canada could become future sources of rare earths production.
Rare earth elements (also called "lanthanides") can be found throughout Earth's crust in low concentrations, however their extraction, processing, and refining is complex due to various technical and environmental considerations - making them relatively more costly compared to other industrial products.
REEs are expected to become increasingly expensive as demand for them rises, driving their price further up. Refractory earth elements (REEs) have already found their way into every electric car battery and their use as magnets, phosphors and polishing compounds increases with increasing awareness about air pollution, climate change and energy independence driving the sale of more hybrid and electric vehicles; governments may accelerate this trend by supporting non-conventional sources like wind turbines which rely heavily on REEs as key components.
Rare earths mining investments present numerous risks; however, those associated with rare earth elements (REEs) stand out. REE production can be expensive and challenging as its elements tend to occur together in low concentrations in mineral deposits containing low-level radioactive material such as thorium (exposure can lead to lung and pancreatic cancer). Furthermore, many REEs may also be bound up in these deposits with highly toxic lanthanides which makes extraction impossible or at best highly inefficient.
As the REE market becomes more concentrated, prices can become increasingly volatile as producers compete for market share or supply disruptions occur. China currently leads this sector of the REE industry with 33.8% of world proven reserves and over half its current production capacity; Vietnam and Russia represent 16.1% and 16.1% respectively of global reserves.
Rare earths remain highly sought-after despite their challenges, and are projected to become even more essential as we attempt to limit climate change to 1.5 degrees Celsius or below, necessitating massive amounts of renewable energy equipment such as wind turbines and electric vehicle batteries that require key raw materials like neodymium and dysprosium for production.
Rare earths investments have evolved, providing investors with several viable strategies for taking exposure in this sector. Funds that focus on mining companies that extract REEs as part of their overall mining operations offer investors exposure while offering diversification for existing portfolios; many even feature dedicated teams to manage and track holdings within each fund.
For investors seeking more tailored exposure, REE-focused funds and direct investments in physical oxides from trading companies offer more tailored investments; although these products do not trade on an exchange like precious metals do, making them harder to track and more prone to volatility than their precious metal counterparts.