Rare earth elements (REEs) play an essential role in green technologies, including fluorescent light bulbs, permanent magnets, and hybrid electric vehicles.
China controls almost all REE production and exports. When they drastically reduced these in 2010, prices immediately skyrocketed.
This research investigates a key question: do financial markets accurately reflect the increasing uncertainty in REEs?
Rare earth elements (REEs) are essential components for many 21st-century technologies, from miniaturizing electronics to green technology, from reducing car carbon emissions to supporting vital defense and telecom systems, rare earth elements are integral parts of today's society. Widely recognized as "seeds of technology," rare earths possess special magnetic, phosphorescent and catalytic properties which boost permanent magnet strength radically; wind turbine generators and disc drives often use REE magnets in permanent magnet configurations as wind turbine generators/drives use to improve wind turbine generators/disc drives use; once dominant position of REE market remains with US being overtaken by China with its economic leverage and dominant supply chain positioning.
China's rise has been propelled in part by its Communist Party's decision in the 1970s to expand manufacturing and global trade capabilities as a means of stabilizing domestic prosperity and recovering from 20th-century events. Beijing was thus able to effectively regulate rare earth production and sales to balance economic development with environmental sustainability.
Renewably Energy Emitters (REEs) have seen rapid growth due to China's dominant position. But demand from developing economies seeking to shift away from fossil fuels and switch over to renewable sources such as REEs will also drive this growth, while electric vehicle adoption also drives demand.
As with any commodity, rare earth elements (REEs) are subject to volatile demand and price fluctuations. A shortage or disruption in supply could spark unrest or even civil conflict - an effect especially relevant in regard to rare earths being considered strategic metals that can finance weapons of mass destruction.
Congress has allocated over $800 million in research funds for developing innovative rare earth sourcing and separation technologies. Companies such as Lynas and MP Materials have received significant government support to build facilities which will diversify the US REE industry away from China, creating capabilities which have yet to exist at scale in Western markets. A Lynas representative told CNBC these businesses include light rare earths processing facilities as well as refineries.
http://americanresources.org/rees-national-security-and-gateway-metals/
Rare earth elements, or rare earth magnets, are metallic elements with uncommon fluorescent or magnetic properties that make them especially useful when alloyed in small amounts with more common metals like iron. When combined together they become extremely useful in improving high-tech products and industrial processes alike - for instance producing smaller, lighter motors for use in electronics (including mobile phones), cars, airplane engines, pumps and pumps and pumps as well as flat screen TVs/computer monitors/batteries used by hybrid electric vehicles/ferrite materials that reduce electromagnetic interference are just some examples of how rare earth magnets come in useful in making high tech products/processes more efficient.
Rare earth elements play an increasingly crucial role in green technology applications beyond military purposes, with demand increasing rapidly due to efforts to create renewable energy sources that can replace fossil fuels. Wind turbines require rare earth elements like neodymium and dysprosium, while moving toward electric cars will increase demand for rare earth magnets for lithium-ion batteries.
Rare earths are scarce resources and mining companies must locate new sources in order to meet rising global demand for them. Finding suitable mines often takes several years; therefore African nations with some of the world's best rare earth deposits have taken the lead in finding rare earth reserves as sources.
Rare earths are typically sold based on supply and demand; when supplies become limited, prices increase and those who control the supply have a financial incentive to sell them. That was what happened in 2010 when China restricted exports in order to ensure enough were available for manufacturing uses within their borders; prices spiked, leading other nations to lodge complaints to the World Trade Organization about China's behavior.
Investors interested in rare earths have several investment options available to them, with producers and processors of rare earths being an ideal way to start. One such ETF, VanEck Vectors Rare Earth/Strategic Metals ETF, holds shares from Chinese, American and Australian producers and processors of rare earths. Another option would be investing at the end of supply chains through buying shares of companies that recycle rare earths; such companies include Metal Tech Recycling Corp in the US as well as Geomega Resources from Canada.
China produces around 80% to 90% of rare earths on the market; Bayan Obo mine in Inner Mongolia alone accounts for 45%. Extracting, processing, and manufacturing rare earths is one of the world's most intensive industrial operations requiring digging deep underground for ore, fuel burning furnaces to separate raw materials from rocks and dirt pits and excavating large pits to separate raw materials from rocks; furthermore producing toxic waste as a by-product.
Mine developments take years to create and are often dependent upon supply fluctuations of critical commodities that lead to price spikes and prompt mining companies to bid aggressively on them. When this happens with rare earth elements that have highly specific applications, shortages may ensue and could threaten industry supply lines.
REEs could prove devastating to high-tech industries around the globe. While REEs are essential components for defense equipment, electronics, renewable energy systems and glass manufacturing processes; they're also used for oil refining, glass making and ceramic production processes and many metallurgical applications.
Though relatively affordable, rare earth materials can be hard to replace quickly due to sudden shifts in production or prices that threaten business operations - this risk becomes especially acute among smaller enterprises that depend on these materials for survival.
China's dominance of the market raises security issues for governments and businesses worldwide. A trade war initiated by a Chinese decision to restrict exports could rapidly reduce global output, driving prices back up while disrupting supply chains.
In 2010, the United States and Japan filed complaints to the World Trade Organization over China's rare earth export restrictions, designed to maintain domestic production. After five years of negotiations between Beijing and Washington over this matter, an agreement was finally reached in which export quotas would be eased but Beijing still retained control of this industry.
REEs are used in magnets found on most electric and hybrid vehicles today, as well as being key components of their hybrid batteries. If the United States were to cut its dependence on China-produced rare earths, American automakers may face financial difficulty and efforts towards greener transportation options could suffer considerably.
http://howdoyouinvestingoldeihl223.theburnward.com/making-an-investment-in-precious-metals
As rare earth elements become ever more vital to modern technology, industry and governments are investing in ways to ensure domestic supplies. This includes everything from developing innovative mining techniques to reinstating local extraction. One key step involves diversifying suppliers; however, this goal may prove challenging given China's tight grip on this sector.
China currently accounts for more than 80% of global REE production and boasts the most REE separation facilities and manufacturing capacity. Furthermore, Chinese companies often control all stages of REE supply chain management from mining through to processing to end use products - giving it an unrivalled advantage on the market.
Fears over China's dominance have given rise to concerns that its power could be used coercively in foreign trade and national security issues. Last year, President of China visited rare-earth magnet manufacturer JL Mag in order to encourage domestic business and telecommunications firms to increase R&D spending and "firmly grasp" technological innovation as strategic bases.
Even though rare earth elements (REEs) may not be as scarce as other minerals, they still represent a limited resource and their unique properties make them more valuable and less recoverable than other minerals - making REE prices highly unpredictable.
Mining and developing REE projects takes years, meaning when prices rise those controlling production can reap substantial profits; there is always the risk that this could happen again.
The Pentagon is working hard to counter this threat. Under President Obama's watch, the Department of Defense (DoD) designated rare earths as an essential material and instituted various mitigation strategies - including stockpiling. Unfortunately, GAO found that DoD's approach for identifying and assessing risks related to specific materials was fragmented, making it hard to establish priorities when it came to supply chain vulnerabilities.
Though the current Department of Defense strategy for acquiring critical materials includes Defense Logistics Agency-Strategic Materials office with its four-year plan for stockpiling materials, no formal way is provided to assess whether mitigation measures are working effectively.