Rare earth elements are integral parts of many high-tech products, such as cell phones, flat-screen TVs and digital cameras. While these minerals might not account for much of a product by weight or value alone, their functionality remains essential to its functioning properly.
Since the 1980s, China has established itself as a dominant producer of strategic raw materials. Western companies' reluctance to invest in exploration outside China has allowed Beijing to further consolidate their hold.
China may dominate rare earth production, yet Westerners remain less dependent on them than they might think. Still, more must be done by Western countries to address this critical raw material issue as Chinese President Xi Jinping consolidates his power further.
Years ago, both the United States and European Union classified REEs as strategic materials due to their high economic significance and supply risks. Yet China overtook America as the world's primary producer thanks to low production costs, strategic company takeovers, government subsidies and technology transfers; since then concerns regarding Beijing's monopoly have grown as demand for REEs increases and alternative suppliers become ever more urgent.
Electric vehicles (EVs) have created new demand for REEs. Their magnets rely heavily on rare earth elements like neodymium and praseodymium for powering; in turn these elements also power MRI machines, producing clearer images without radiation radiation, as well as in military products like stealth technologies, night-vision goggles and guided weapons more effectively.
As such, many companies are seeking to expand their REE supply chains outside China. MP Materials is one such example that has done this successfully. Spun off from Molycorp in 2020 and operating the largest REE project in western hemisphere at Mountain Pass mine in California producing high purity separated neodymium oxide; heavy rare earth concentrate; cerium, lanthanum and yttrium oxides and carbonates among many other REE products.
MP Materials stands poised to take advantage of growing REE demand with their commercially viable separation process, but in order to do so, significant investments and time will be necessary to build up its supply chain. Japan's experience in 2010 proved how dependency on one supplier can have disastrous consequences; therefore many Japanese carmakers and Defense Department officials want to reduce dependence on China by finding alternative sources for supply; creating powerful incentives for companies like MP to succeed and doubled since their 2020 IPO (compared with only 5% growth on the S&P 500 index during that same time). MP shares have doubled since this period, surpassing even China in terms of investment return (compared with just 5% return by far).
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Rare earth elements (REEs) play an integral part in renewable energy technologies like wind turbines and solar panels, consumer electronics such as smartphones, computer hard drives and flat-screen TVs, missile guidance and radar systems, as well as defense applications like missile guidance systems. Although REEs are essential components in many products that we rely on daily, their mining and refining processes have significant environmental consequences.
REE mines often produce toxic waste through leaching ponds that leech into surrounding waterways, negatively impacting ecosystems and killing fish. Mining also requires blasting and heavy machinery which may damage nearby buildings and homes as well as land.
Although REE mining isn't the sole cause of negative environmental impacts, it can certainly play a substantial role. Rare earth mining can damage both the environment and workers; one accident at China's Bayan Obo mine left more than 12 workers dead while also leaving extensive environmental damage behind. As a result, stricter safety regulations were placed upon this mine, yet it still served as a major pollutant to local residents.
Some companies that produce REE have been accused of illegally exporting to China to bypass production restrictions; this has contributed to an imbalanced global market and it seems unlikely that China will lower their quota anytime soon.
United States officials have attempted to become dominant players in the rare earth industry again, but it's been difficult for them to maintain dominance at an age when prices remain high and supplies largely controlled by one country like China. Molycorp declared bankruptcy following the price boom and now sends all its Mountain Pass mine ore straight over there for processing.
But building a robust domestic REE supply chain could increase competition and decrease our reliance on dominant players, while building it here may prove less expensive than importing raw materials from foreign sources, potentially making EV batteries and related commodities more accessible and appealing to consumers.
Most people view technology as the future, something to improve quality of life. Silicon Valley startups offer great potential; manufacturing firms use new machines and automation to increase efficiency; while green tech offers the greatest hope of mitigating greenhouse-gas emissions enough to avoid climate collapse.
All these innovations share one thing in common: they all require rare earth elements - often classified as critical because they do not naturally occur on our planet in sufficient amounts - which are vitally important for an array of technologies.
REEs saw tremendous growth throughout the 1990s and 2000s as companies exploited their unique magnetic properties to produce better, cheaper electronics. Erbium-doped fiber amplifiers improved long distance telephone calls as well as internet data transfers around the world, while Apple's 2008 debut of their iPhone represented the pinnacle for REE use - it uses Lanthanum lenses to reduce distortion in tiny camera lenses; Neodymium magnets to increase sound levels from tiny speakers; Yttrium and Erbium Phosphors to produce vibrant colors on energy-efficient screens - this showed just how far REE applications had come!
China currently leads the REE market, producing most of the raw materials and dominating almost all downstream production sectors to final product creation. China has managed to establish this monopoly due to low production costs, strategic company takeovers and government grants and technology transfers that support it throughout.
The US military is concerned about their reliance on foreign suppliers of REEs as it may compromise national security. As such, the Department of Defense plans to create more domestic industrial capacity for light REEs in particular; A Virginia-class submarine requires four tons, an Arleigh Burke-class destroyer needs two and fighter aircraft require over 400 kilograms each year for operation.
Concerned that China might restrict REE exports, the Pentagon invested in Lynas Corporation (ASX:LYC, OTC Pink:LYSCF), a US company with an REE separation plant in Texas. Unfortunately, private-sector competitors will likely remain unable to compete effectively with Chinese suppliers for some time to come.
http://adhesive-technologies.blogspot.com/2012/03/texas-rare-earth-resources-corp-selects.html
Rare earth elements (REEs) are 17 metallic metals found primarily in the middle of the periodic table, each possessing unique fluorescent, conductive and magnetic properties. As such, they're essential in manufacturing tech products from consumer devices to wind turbines and electric vehicle batteries; their environmental benefits play a central role in greening our economy.
Unfortunately, most rare earth mining is done in China and as such this country enjoys near monopoly status in this industry. As a result, efforts in the United States to compete have proven unsuccessful; Molycorp went bankrupt after sending raw materials for processing to China through Mountain Pass Mine while "reshored" projects have failed even though many similar attempts had been attempted before them.
Mining companies often target rare earths as an area for long-term investment due to strong demand and industry outlook, making investing in this niche of the mining sector appealing. Investors should remember, though, that rare earths represent an emerging market and their prices don't tend to follow conventional investments like stocks and bonds - therefore it is essential to consider how rare earth assets fit within your overall portfolio, including other alternative investments or commodities.
One way to diversify is with the REMX exchange-traded fund (ETF), which houses numerous rare earth companies specializing in lithium battery technology and related industries. Lithium is essential to electric vehicle batteries and energy storage solutions such as Tesla Powerwall; according to McKinsey estimates its demand could grow at an estimated compound annual growth rate of 30% over the next 10 years.
Rare earths provide not only diversification benefits but also the potential for high returns when supply meets demand. This is especially true if you invest in an international producer that could erode China's dominance in this industry; MP Materials shares have seen tremendous gains since its 2020 IPO.
Greenland's REE mining sector's future depends on a host of variables; price trends, technological development and political motivation all play an integral part. But with rapid expansion projected for this industry, it pays to keep tabs on all that goes on there.