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Rare Earth Element Stocks

Updated on September 20, 2012

Rare Earth Element Stocks Are Mined Primarily In China

photo by Jurvetson (flickr)
photo by Jurvetson (flickr)

China's dominance in the strategic rare earth industry

The first of the rare earth elements was discovered in a mine in the small Swedish village of Ytterby in 1787. That was when a rare earth mineral was found in the quarry and scientists soon learned that it contained a new element Yttrium (Y in the periodic table) named after for the location of its discovery. For the next hundred years or so new elements belonging to the rare earth metals family continued to be discovered primarily from the initial mine, a second in Bastnas, Sweden, and a third in the Russian city of Miass in the Ural mountains. Slowly technology progressed and with the addition of new analysis techniques such as optical-flame spectroscopy the puzzle began to become clearer until eventually the complete set of the 30 rare earth elements had been uncovered. The rare earth elements include all 15 lanthanides plus the 15 actinides. Historically the list consisted of the lanthanides + scandium and yttrium because they were often found in the same ore as the others. This made up the 17 rare earth elements. At any rate, even at 30 elements the rare earths nomenclature is more of just a common name since the elements are neither "rare" nor "earths" in the modern sense but were classically named so to differentiate them from the alkaline earth elements. To the point of even receiving a formal designation as such by the International Union of Pure and Applied Chemistry (IUPAC) in 1968.

The complete list of the original 17 rare earth elements is as follows: Scandium, Yttrium, Lanthanum, Cerium, Praseodymium, Neodymium, Promethium, Samarium, Europium, Gadolinium, Terbium, Dysprosium, Holmium, Erbium, Thulium, Ytterbium, and Lutetium.

The 15 additional actinides consists of: actinium, thorium, protactinium, uranium, neptunium, plutonium, Americium, Curium, Berkelium, Californium, Einsteinium, Fermium, Mendelevium, Nobelium, and Lawrencium.

There are many reasons that you should be interested and concerned with these elements and their role in our modern society. For one, the rare earth metals companies have become a trending area of specialty for astute investors. While most of the rare earth elements are not actually that rare in the sense of being hard to find (Cerium has an abundance similar to that of Copper), they are rare to find in concentrations dense enough to make mining them feasible. The near future is likely to see shortages in at least a few of these elements without the increased production by companies both in the United States and abroad. There are also investments to be made in tangential industries from those that refine the ore to those who process the various oxides and elements into everyday products from magnets in smartphones and hybrid cars to catalysts for refining oil and even household compact florescent light bulbs. Without knowing it is almost a certainty that you encounter some of these rare earth elements and their benefits through the course of an average day.

In the 1950s and 1960s new and more efficient methods of separation from the ore material began to be developed. For a while Moutain Pass rare earth open-pit mine, which lies outside of Los Angeles, California was a major US supplier of these elements. However, it has since been overtaken in a major way by mines in China who has now become the dominant country in the race to extract these elements of the earth. Nearly 95% of the rare earth elements are now being supplied by Chinese mines and this is a figure that should be concerning to anyone interested in a self-sufficient society and not wanting to rely on a foreign state so heavily. There have increasingly been more and more trade implications causing problems throughout the industry and this has caused at least some US-based companies to take initiative to prevent a monopoly on the part of China.

One of these companies is the owner of the Mountain Pass mine Molycorp Inc. which has recently taken steps and increased efforts in order to fast track their plans to return the US mine to full production and beyond to meet the worldwide doubling of demand for the REEs in 2012. Avalon Rare Metals Inc. is a company focusing on deposits of these rare earth metals in Canada. The Rare Element Resources company is interested in obtaining supplies of the REEs from Bear Lodge Property in Wyoming. Then there is another popular Australian mining company, Lynas, which is rushing to boost a refinery in Malaysia. All of the above and other key players in the market will likely contribute to an increased and more diverse supply of a material which has now become so prevalent in modern devices. It is unclear at the moment whether the supply will so greatly increase that the price will drop to levels that would make mining rare earths unjustifiable or whether the demand can sustain itself and this is what makes the stocks of these companies interesting plays.

Regardless, it has to be true that increased output of rare earths will be beneficial to civilization as a whole despite which companies are able to succeed in the marketplace. The country has closed, fined, and nationalized various mines for reasons of pollution or otherwise and the effect has caused increased prices in many sectors of the green-energy arena as well as elsewhere. Further, they have recently decreased export quotas and increased export duties all leading to the same effect on the rare earth metal supply which is crucial to even various defense products such as smart bombs. China's chokehold has revealed itself and the rest of the world would be wise to limit the grip as soon as possible.


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    • againsttheodds profile image

      againsttheodds 5 years ago

      That is a great observation Larry. I know for example the Toyota Prius uses a lot of rare earth in the batteries. With so many uses it is hard to imagine that supply will exceed demand by too much or for too long although there are reports that some Chinese are holding large quantities just to wait until prices go higher so there may indeed be some manipulation working in that way already. Automobile manufacturers as well as other industries are already working hard to phase out rare earth usage in various components so as to not be so dependent.

    • Larry Fields profile image

      Larry Fields 5 years ago from Northern California

      Good hub. Voted up and interesting.

      My understanding is that REs are used in hybrid cars more than in standard cars. If RE prices go through the roof, metal thieves may target hybrid cars. The owners may need to pay car-watching fees, in addition to valet parking fees, when they eat at certain restaurants.