As more countries transition towards electric vehicles, renewable energy systems and high-tech manufacturing, rare earth elements have become essential. Unfortunately, China's tight control over production has led to a global shortage.
efforts to take on China and rebuild domestic industry had become dormant; but with President Biden now at the helm, efforts are receiving new energy and focus.
Investment in mining companies that specialize in rare earth elements has the potential to reap significant returns; however, they also come with unique risks.
Rare earth metals are an abundance-driven metal group used in many modern technologies. Applications for rare earths include magnets for small and large motors; catalytic converters in petroleum refining facilities and automobiles; glass additives and polishing compounds; rechargeable batteries; television screens and computer monitors; as well as powering electric vehicles - among others.
As with most commodities, rare earth prices are determined by supply and demand. When prices increase, those controlling supply may feel pressure to sell off some or all of it - further pushing the price upward and prompting mining companies to explore alternative production sources; but this process takes years.
China dominates the international market for rare earths and therefore poses potential trade negotiations issues between itself and the United States. Experts contend that even if China completely stopped exporting them, rare earth markets would survive; nonetheless, efforts have been underway in America to increase domestic production - Molycorp purchased Mountain Pass Mine in Nevada but most of their product currently goes back to China for processing.
Rare earth elements, located near the bottom of the periodic table, are essential in high-tech products. Their magnets are found in products like Apple AirPods and iPhones; green technologies like General Electric wind turbines and Tesla electric cars; medical tools like Philips Healthcare scanners; as well as military hardware such as F-35 jet fighters. According to US government policy, rare earth minerals are listed among those essential to economic and national security; President Biden has prioritized creating domestic supply chains.
Prior to recently, most rare earth elements came from China. One mine in Inner Mongolia alone accounts for 45 percent of global production at Bayan Obo Mine; however, mining these minerals is far from environmentally friendly; operations can lead to soil erosion, water depletion and biodiversity loss; furthermore many minerals require acid extraction from their ores with often harmful byproducts being produced as byproducts.
China began restricting rare earth exports to protect its manufacturing sector, prompting prices to soar and sparking fears that one country might control this essential material market. To prevent this outcome, the Obama administration initiated efforts to develop domestic sources for rare earths and other critical minerals - with Lynas playing a vital role in helping secure their supply.
http://www.theinvestar.com/rare.htm
Rare earths are essential components of carbon-neutral technologies such as renewable energy, hybrid and electric vehicles and advanced batteries. Furthermore, rare earths serve as key ingredients in producing small but superefficient permanent magnets used to keep smartphones buzzing, wind turbines spinning and EVs zooming. Although the United States mines and concentrates rare earth minerals, most of the steps required for their manufacturing as magnets - refining and separation - occur overseas. President Joe Biden has recognized rare earth minerals as vitally important to national security, and his proposed budget includes research into any gaps in domestic supply chains. One of the Department of Energy's national laboratories in Iowa is working on ways to reuse rare earth oxides while recovering metals without using harmful acids or fumes associated with traditional techniques.
Investors looking to promote sustainable and responsible growth may benefit from looking into companies that recycle rare earth elements, such as Metal Tech Recycling Corp (NASDAQ: MTRX), American Resources Corp. (NASDAQ: AREC) in the US and Geomega Resources Ltd in Canada.
Establishing a domestic supply chain could increase competition in the rare earths market and lessen reliance on dominant players like China. MP Materials (NYSE: MPR), for instance, has invested its free cash flow back into itself by reinvested at Mountain Pass mine this year and magnet production by 2025; eventually they plan on bringing full supply chain capabilities back home from Las Vegas.
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As demand for hybrid and electric vehicles, green technologies, power tools and cellphones increases, so will demand for rare earth elements - but these minerals are difficult to mine and limited supply has caused their prices to skyrocket - providing investors with an opportunity to profit by investing in companies that extract and process rare earths.
In 2010, rare earth prices rose precipitously, prompting concerns of shortages and geopolitical tensions. China responded by restricting exports for political leverage - Japan and the U.S. attempted to counter this move but ultimately were unsuccessful; consequently, this price spike spurred bold solutions like opening up Amazon rainforest mining operations and harvesting resources from outer space.
But China eventually eased off on their rare earth export restrictions and is now producing more of the REEs in the world than any other nation, becoming an international supplier.
American REE industry efforts are underway to increase production and decrease dependence on China. Molycorp's Round Top project received federal approval and will go into operation by 2021; MP Materials' (NYSE:MPX) assets purchase was recently inaugurated into USA Rare Earth processing plant for rare earth processing; producing high purity, separated neodymium oxide; heavy rare earth concentrate and lanthanum cerium oxides/carbonates as by-products.