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
