Tuesday, June 7, 2011

Rare Earth Metals, Part 1

This article is not meant to be a serious one about the rare earth metals, more of an introduction and a test of reader interest in the subject.  I myself am interested in the subject.

Perhaps one of my dear readers is an expert in this field?  If so, kindly email me and we can work up a plan to have you do a Guest Post!

The "Rare Earth" metals have been getting a lot of attention in the past couple of years or so.  They are not all that rare, the problem is that they are usually not located in concentrated "ores".  These chemical elements the Lanthanum Series (Lanthanum to Lutetium) and most miners also lump Scandium and Yttrium in with the rare earths.

The main reason the rare earths have been getting all this attention is because they have a wide variety of uses, especially in high tech and "Green Energy".

Application: Permanent Strong Magnets (think windmill turbines): Neodymium, Dysprosium and Terbium

Application: Computer Monitors: (Europium (red) and Terbium (yellow))

There are many, many other uses, including military uses (in sensors, etc.).  In the iPhone (as well as all modern computers) several of these rare earths are used.

The main reason this subject has become relatively prominent is that China produces some 95% of the rare earth metals.  China has cut way back on their exports int he past year, and the prices of the metals and their oxides has gone way up.  The US government is well aware of how important this issue is for them.

Currently, to my knowledge, there is NO rare earth metal mining production is the USA.  Molycorp (ticker: MCP on the NYSE) will be starting production of limited amounts about next year from their mine near the CA / NV border area.  But, Molycorp does NOT have a plant set up to separate the rare earths from each other (they have very similar chemical properties).  But, MCP is a way to play the rare earth frenzy.  MCP IPO'd at $14 a share and is MUCH higher even though it has not produced ANY rare earths yet.

Other earlier stage miners worth a look:

Avalon (AVL)
Great Western (GWMGF, I think) <--- these guys own a couple of processing plants
Rare Earth Elements (REE)

My hunch is that these stocks are all overpriced now.

Expert and general opinion is ALWAYS welcome in subjects of interest to me!  Please comment in the Comments section below if you want to pass along the information to the rest of us, or send me an email.


  1. What I want to know is why no one ever mentions Stans Energy, ticker HRE (Heavy Rare Earths) being that HREEs are more valuable and do not have tons of supply coming online with the light REEs put out by MCP and LYNAS. So what am I missing what is the downside here?

  2. I have just a passing knowledge of the industry but it is my understanding that the mining of said "rare earths" is a dirty business. As such it suffers from NIMBY syndrome just as a lead mine would. We need lead but nobody wants a mine in their neighborhood either.

    So China has cornered the market on "rare earths" primarily because they have been willing to deal with the NIMBY situation through CCP edicts.

    China does not have a monopoly on many of these elements, just temporary market control and as good capitalists jacked up the price, the same way gasoline, cable tv and apple computers do.

    Yes I do know that China has a preponderance of some of these valuable metals but it is no way the only source on the planet. Just the only source willing to pay the price to extract said minerals.

    Once the pricing changed and international access to said minerals was curtailed there was a race to "re-open" retired mines around the planet. As such it takes some time to get up to speed but I know for example that Vietnam has restarted mining with support from Japanese Zaibatsu.

  3. Matthew and donpaulo,

    Both of you passed along good observations, thank you!

    Remember, that is one of the reasons I write this blog, to learn from you...


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