Rare earth elements are an indispensable component of modern life; mobile phones, TVs and cars would simply cease functioning without them. Yet investing in this sector presents its own set of unique challenges.
Mining and extraction have significant environmental effects, and securing rare earth supply can be challenging. While China's monopoly over refining has created some uncertainty for US efforts, China itself is actively working on building capacity.
Rare Earth elements mining is an intricate process. Due to their concentration and chemical properties, extracting them requires costly and energy-intensive extraction methods, and purifying these minerals often produces toxic waste and causes environmental damage. Governments should therefore support sustainable production methods by reducing local pollution while moving polluting parts outside China.
Rare earth metals, despite being limited in supply, are essential to modern technologies like cell phone touchscreens and wind turbines, as well as permanent magnets which produce electric power. China currently dominates production of rare earth minerals; however, in recent years the United States has made efforts to regain leadership by purchasing mines like MP Materials' California mine and Lynas Corporation's Texas facility.
Australia is a major producer of rare earths and has extensive mining expertise. Furthermore, this vast country contains significant reserves of crucial minerals.
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Rare earth metals might sound difficult to find, but they are actually fairly widespread throughout Earth's crust and just require special handling in order to extract and separate from other minerals; hence their designation as rare earths.
Rare earths will continue to play an increasingly significant role in renewable energy production as demand for renewable sources increases and people switch from internal combustion cars to electric vehicles, necessitating their use in producing permanent magnets for electric vehicle motors and wind turbines.
As a response to rising prices caused by scarcity, some aggressive solutions were proposed; such as opening up Amazon rainforest for mining or exploiting Greenland resources. A company named Molycorp also reopened their Mountain Pass mine in California but now sends their ore to China for processing.
Countries should focus on refining domestically in addition to developing new mining operations. Refining may prove challenging due to separation facilities that cost up to $156 million - out of reach for many African nations. African nations could leverage the African Continental Free Trade Agreement instead to ensure value addition in-continent prior to exporting any material overseas.
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As demand for green energy technologies increases, recycling seems like a logical solution; however, recycling presents many obstacles such as costs and availability of rare earths; however, only about one percent of global rare earth metals are recycled today.
Metals such as nickel and cobalt are integral to modern technologies such as permanent magnets and laser beams, plasma monitors, wind power turbines, rechargeable batteries and LED lights; making them vital components in creating green energy solutions.
As prices rose and governments expressed concerns about their dependence on these vital materials, innovative ideas began emerging. Entrepreneurs proposed mining in the Amazon rainforest or extracting them from sea floor deposits - some even suggested collecting them off of the Moon!
These ideas never took off due to the prohibitively expensive cost of isolating rare earths from their ore. Separating rare earths would cost over $150 million alone; much more than most African countries could afford. Without its own separation facilities, Africa will continue exporting raw ore and miss out on value addition and manufacturing benefits.
Rare earths are essential components for many important technologies, from permanent magnets in efficient motors to rechargeable batteries for consumer electronics. Unfortunately, rare earth elements can be difficult to distinguish and require substantial energy resources for production, mining and purification processes.
Metals of this group can be found concentrated in carbonatite, peralkaline and ion-adsorbed clay deposits. Bastnaesite ((Ce, La, Y)CO3(OH)F) is the primary ore mineral at three of the world's largest rare-earth deposits: Bayan Obo and Maoniuping in China and Mountain Pass in California - also important are monazite, lanthanum-rich xenotime and loparite.
Rare-earth deposits' geographic concentration makes the market vulnerable to disruptions in production or exports, as evidenced by Chinese government quota reductions for rare earth exports in 2010 and 2011. The intention was geopolitically driven; to exert geopolitical leverage by discouraging users from purchasing materials that exceed allowable export quotas and force producers into increasing production - potentially working temporarily but leading to price rebound soon afterward.
Mutual funds provide investors with an excellent way to diversify their rare earth elements investments. Available both open-ended and closed-ended formats, mutual funds can be divided up by attributes like risk profile and asset class; each fund's objectives and strategies may differ but many abide by similar principles.
Rare earth metals, sometimes dubbed the vitamins of modern materials, came to public notice when their prices skyrocketed tenfold between 2010 and 2011. But even as their prices dropped back down again, rare earths remained an important focus of innovation within companies and government labs worldwide. Geoscientists worked to improve understanding of mineral deposits that may one day be mined while process engineers devised more effective production and recycling systems; materials scientists sought alternative materials requiring either less rare earth metals or none at all.
However, despite these efforts, rare earth supply remains highly concentrated globally. China accounts for more than 80% of global production of Neodymium-Praseodymium-Dysprosium magnets (NdFeB), while also controlling most processing capacity - which decreases resilience of supply chains against physical disruption or trade restrictions.
Investing in Rare Earth Elements: Opportunities and Challenges