In post-oil world, investors turn to ‘rare earth’ metals

Clean energy targets across the world have seen renewables rise to prominence as energy sources and demand for electric cars increase, accelerating ‘rare earth’ mining in Asia, Australia, Africa, and the USA.

Seldom heard of but used in abundance, ‘rare earth’ has been getting lots of attention recently and so have companies with ‘rare earth’ development projects.

“Rare earth” elements are a group of 17 chemically similar elements crucial to the manufacture of many hi-tech products. Despite their name, most are abundant in nature but are hazardous to extract. Most rare earth elements are used in several different fields, as well as those listed below.

The rise of the rare earth metals market continues to move upward as it parallels the recent and future upticks of the Electric Vehicle (EV) market. EV’s need magnets and they are majorly made from rare earth metals.

Additionally, rare earth materials such as dysprosium, neodymium, terbium, europium, and yttrium are often critical components of renewable energy hardware.

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Rare-earth elements (REEs) are used as components in high technology devices, including smartphones, digital cameras, computer hard disks, fluorescent and light-emitting-diode (LED) lights, flat-screen televisions, computer monitors, and electronic displays.

Nevertheless, Tim Worstall a wholesaler of rare earth metals argues that rare earth are not rare (they are also not earth). It is near trivially easy to find deposits. Anyone who really wants to can increase the production of them. It is the processing that is the problem. The price rises that came from the Chinese efforts to assert dominance in 2010 led to both Malaysia-based Lynas and Molycorp (a US mine that does not process its own concentrates) being financed. That led to production increasing sufficiently for global prices to fall. Molycorp then went bust and Lynas nearly did and was saved in a highly dilutive refinancing.

The global market for rare earth metals has grown at an annual rate of about 8 – 11 percent over the last decade, according to the World Trade Organisation, but this pace has spiked in the past 12-18 months or so.

One of the main reasons is because consumers around the globe, particularly in China and the rest of emerging Asia, are buying electronics goods, such as cameras, new Apple i-Pads, Samsung flat-screens, and many other products, hand-over-fist. Simply put, trillions of dollars of modern devices wouldn’t be possible without the existence of these metals.

According to MarketWatch, the global rare earth elements market size was valued at $2.80 billion in 2018 and is estimated to witness a compound annual group rate (CAGR) of 10.40 percent to 2025. A report from Brand Essence Research added to that projection saying that the market size will reach $20.60 billion in 2025.

Growing demand for magnets in automobiles and energy generation will largely contribute to the growth of the global rare earth metals market over the forecast period. The demand for rare earth magnets is mainly increasing by their consumption in electric and hybrid vehicles.

Increasing focus on utilizing clean and renewable energy is giving substantial pressure on the electricity providers, to generate energy through renewable sources, which in turn will show a positive impact on the growth of this market.

Active rare earth stocks in the markets include Canada-based Medallion Resources Limited. Malaysia-based Lynas Rare Earths Limited. US-based Tesla, Inc., Las Vegas-based MP Materials Corp., and Shanghai-based NIO Inc.

London Stock Exchange-listed Pensana Rare Earths Plc’s shares soared in January when it announced plans to establish a rare earth processing facility at Saltend Chemicals Park, Yorkshire, England.

Once constructed, the $125m facility will create around 100 direct jobs and become one of the world’s largest producers of rare earth oxides, used in a range of industries including electric vehicles and offshore wind turbines, a staff writer at mining.com said in a report.

The project will be located at the Saltend Chemicals Park, which hosts a cluster of chemicals and renewable energy businesses, including BP Chemicals.

Lynas has assets in Australia and Malaysia and recently announced plans to develop rare earth processing capacity in the US alongside a local downstream rare earth metal processor. Its share price has soared by over 50 percent year-to-date, with much momentum coming in the last few weeks.

While Lynas has seen plenty of movement, so have companies developing rare earth assets. The Investing News Network (INN) reached out to rare earths-focused companies with properties in Canada and Australia that their respective governments deem significant to find out whether the sector has been getting extra attention. The answer was a resounding “yes,” with each pointing to the trade war between China and the US as the reason why.

However, rare earth stocks do not trade like other precious metals, and few exchange-traded funds (ETFs) hold them. So, the most effective way to buy into rare earth stocks is directly through the miners. Rare earth stocks have massive growth potential but are also extremely risky, especially given China’s piece of the pie.

SGS with an office on Wharf Road in Apapa mines graphite and rare earth elements. This is one place investors in Nigeria could begin their investigations about how to take a position in this market.

Interestingly, the website of Nigeria’s Ministry of Mines and Steel Development has negligible information on rare earth elements. The licenses of at least 100 companies listed under Mineral Buying Centre Trading Rare Earth Elements in Nigeria on the ministry’s website have expired.

A study in 1996 by Jacob Adetunji of the University of Derby titled ‘Rare earth elements pattern in Nigeria’ reported the pattern of ten REE’s (La, Ce, Nd, Sm, Eu, Gd, Tb, Dy, Yb, Lu) determined by Instrumental Neutron Activation Analysis (INAA) for coals obtained from eight mines in Nigeria, namely, Okaba, Enugu, Ogbete, Onyeama, Gombe, Lafia, Asaba, and Afikpo.

People familiar with rare earth elements studies and application say Nigeria requires systematic studies of its coal deposits because has a chance of leading the discovery of commercial deposits of rare earth elements.