Rare earth element stocks

With rare earth taking the center stage, rare earth element stocks are drawing the eyes of savvy investors.  Twenty years ago the rare earth element market had a total output of 60,000 metric tons.  China’s production was 16,000 metric tons at the time, making all the other countries producers of approximately 44,000 metric tons.  You can see that China was not the major producer twenty years ago.

Ten years ago, with new technologies the rare earth elements market exploded, because the demands went through the roof causing rare earth element stocks to begin to rise. This caused China’s exploration and production to explode.  From 1990 to 2000 China’s production rose by 450%, with their production increasing to 73,000 tons.  During the same period, production from other countries plummeted by 60%, which turned the tables on the rare earth minerals market.

As of 2009, global production of rare earth minerals stood at 132,000 metric tons.  Since 2000, world and Chinese production have continued to increase.  By 2009, world production increased 45%, with Chinese production increasing 77%, to 129,000 metric tons.  Production from other countries decreased to about 3,000 metric tons in 2009.

In other words, over the span of twenty years, China has gone from being the dominant player to the only game in town.  In the second half of 2010, China sharply cut exports by 72% causing a global price spike of rare earth stocks over 500%.  Recently China has announced plans of more export cuts, with the possibility of cutting all rare earth element exports completely.

With one such dominant player in the rare earth minerals sector, production capacity is near impossible to predict on a forward moving basis.  One thing is certain, if global demand continues to increase at the current rate, by 2015 there will be a significant global gap between supply and demand equaling about 40,000 tons. In addition, if China continues to reduce export quotas, and bans the export of a number of rare earths, this production gap could be even larger.

With China’s maneuver to keep all their rare earth production within the country, to be used for production of products that use new technologies, this will leave the world very short, and we all know what happens when demand exceeds supply.  The world is scrambling to fill the void.

There are new technologies that Canada is using to unlock old rare earth element reserves, that they have not been able to use until recently.  The U.S. has been working on opening a mine that they closed previously, so the U.S. would not be left without the products that Americans are so addicted to.  With these new sources for rare earth minerals coming on the market, rare earth stocks U.S. will begin to rise, so investing in rare earths could move into center stage.  Keep your eye on rare earth element stocks for the future.

Rare earth element stocks


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