SC, China apparently has most of the world's rare earth deposits, but I remember hearing about rare earths contained in those mine tailings in the US, though at the time it wasn't cost effective to extract them. I think there was a company that bought up the rights to most of these mine tailings.
China has put on supply constraints over the past several years and the prices have risen, so maybe those tailings are now a viable new source(?) With the growing global demand for electronics, this sector seemed like a no brainer, but it turned out to be a dog until a year or so ago -
The rare earth metals ETF has been a standout this year, and strengthening fundamentals may continue to support this sector pick.
The VanEck Vectors Rare Earth/Strategic Metals ETF (NYSEArca: REMX), which is comprised of global companies involved in producing refining and recycling rare earth and strategic metals and minerals, rallied 59.7% year-to-date. Rare earth metals miners may continue find support from both the supply and demand side ahead.
China, the largest single country supplier of the global rare earths market, has taken efforts to cut down illegal mining have pressured the supply chain and bolstered prices, according to Metal Miner.
Furthermore, in an attempt to enforce new environmental regulations, the Chinese government has suspended operations at substandard rare-earth smelters this year, reports Nikkei Asian
“The environmental crackdowns this year appear to have been stricter than before, although crackdowns have been going on for years. Also, control over illegal mining intensified, and these factors pushed up prices of rare earths,” Fu Liyao, an analyst at chinaiol.com, told Global Times. “Other factors include the State-led buying of rare earths for additions to reserves and the consolidation of major rare-earth companies.
“Illegal mining volume has basically disappeared, compared with the previous annual level of 30,000 tons to 40,000 tons. All these factors curtailed supplies in the market and drove up prices,” Fu said.
On the demand side, technological advancements and global consumers’ increased reliance on high-tech gadgets have fueled demand for rare earths that are found in many digital devices.
For instance, with the increased popularity of electric vehicles as a means to reduce reliance on gas and lessen harmful gas emissions, Tesla and other electric car makers have enjoyed rising demand, which in turn has raised the demand for rare earth metals in numerous segments of the industry.
Several European countries have already taken steps toward banning all fossil-fueled cars before the middle of the century, and China, the world’s largest vehicle market, is also considering a ban on the sale of fossil-fueled cars, reports Rupert Hargreaves for ValueWalk.
According to Newgate research, based on current demand projections of electric cars, the increased demand could require 35,000 metric tones per year of neodymium and praseodymium, or NdPr, form current global supply of 25,000 per year by 2025.
For more information on the miners space, visit our metals & mining category.
SC, Looking further, that company was Molycorp, which was acquired (after bankruptcy in 2015) and is now part of a privately held company called 'Neo Performance Materials' -
If there was ever a poster child for not investing in fads, rare earth metals might be perfect for the role. If you follow the investment markets you may remember that at the beginning of 2011, most people had never heard of rare earth metals. There's no doubt that it's a catchy name that invites intrigue, but who knew that mining for these metals took place?
Without rare earth metals (some people call them rare earth elements), the electronics we use every day would be nothing more than good looking, but non-functioning, devices. Rare earth metals are used in cell phones, batteries, sunglasses, computers, missiles, magnets, wind turbines and lighting, but these 17 elements aren't rare at all. Some of these metals are among the world's most abundant elements; they're only referred to as "rare" because they're difficult to extract.
SEE: Understanding Rare Earth Metals
Separating these elements from other materials takes a lot of acid and, because Western countries like the United States, Canada and many European nations have pretty strict environmental regulations, it's not only impractical to mine them, but can also be politically unpopular.
Because of that, 97% of all mining and processing comes from China and, until just a few years ago, the world purchased these rare earths from China without incident. China began cutting production exports by 40% in 2010, which inflated prices significantly. China denied claims by Western nations that it was driving up prices, citing environmental and future supply monitoring. 2011 saw even deeper cuts in exporting, which made other countries look for alternative sources.
Share Prices
Molycorp's IPO in 2010, and a sharp run up in share price, sparked investor interest in rare earth metals in the United States. Molycorp, backed by $1 billion in private equity, used money raised from its IPO to restart a California rare earth mine that was once one of the largest in the world. The share price rocketed to as high as $77 per share from the IPO price of $14, when domestic investors saw this as the answer to increasing prices for Chinese rare earth supplies.
Financial media fed the hype by filling the Internet with articles about rare earth metals, running broadcasts from the mine and headlining the stock price as it continued to rise. Since then, Molycorp has received negative reaction by some, alleging that it turned into a pump and dump stock.
Other Sources
The United States wasn't the only country finding solutions for the rare earth crisis. Countries like Australia, Afghanistan and Mongolia became centers for a modern day gold rush for rare earths, while electronics companies invested heavily in finding alternative materials for their products that don't involve rare earth metals. Rumors of more supply coming to market, along with reports of significant progress in finding other materials, quieted investor demand, causing the stock to retreat. Today, Molycorp sits just above $32, a 58% drop from its peak price.
Chinese Conflict
Although more supply is hitting the market, it has done very little to lessen the world's dependence on Chinese sourced rare earths. In March of 2012, The United States, along with Europe and Japan, filed a formal complaint with the World Trade Organization alleging that China is trying to keep prices low for its domestic manufacturers and lure manufacturers to China.
Western buyers of rare earth metals acknowledge, as part of their complaint, that China is still the leading supplier and companies outside of its borders don't have equal access to the rare earth metals they need. China continues to counter by saying that it is concerned that the supply of these materials may run out if production isn't closely monitored, making the standoff between China and its Western customers continue.
The Bottom Line
From the investor's perspective, the rare earth metals trend has dwindled since 2010, and longer-term investors aren't convinced that a long-term investment in companies like Molycorp is worth the risk. Outside of the stock market, though, the rare earth standoff continues.
News 
Market Data 
Discover 
