I found myself ruminating over the subject of rare earth elements a good deal over the holiday season.
What with everyone desiring an iPad or Samsung Galaxy Tab or e-reader as a present and in the last few days all the talk about the burgeoning tablet market (just this morning
PCMag is reporting that 80 new models are to be announced or demonstrated at this year's
International Consumer Electronics Show starting in a couple of days).
So what are rare earth elements and what do they have in common with tablet computers and other gadgets and technology?
It is a tale about the convergence of many different areas: Investing, resource exploration and exploitation (in the form of industrial mining) and most of all — technology.
All of these devices that make us so gadget happy at the moment require minute quantities of what are called Rare Earth Elements in their manufacture.
I've been gathering information here and there to write about this topic for several months now. Seeing several stories in the
New York Times over the last few months got me to thinking that I should get a few electrons up on the subject that I can add to later.
So what are REEs?
A group of 17 elements that include dysprosium, europium, and neodymium make up the category, that is sometimes shortened simply to “rare earths” (here is a link to a good overview of
REEs on Wikipedia that also has a chart listing them all and the types of technology products they are crucial to making).
And in fact they are not really rare at all, it is just that they are spread out around the world and are rarely (pun intended) found in large enough concentrations to make it easy to extract them.
In the past at least, mining them in an economically viable manner has required the work be done in a place where labor costs are lower and environmental regulations much less stringent or enforced than in most Western nations.
China has fit that bill for years now and has a corner on the market. In fact it has been flexing its muscle of late in terms of exporting raw ore, especially to Japan, whose manufacturing economy constantly hungers for the stuff (see the link below “Japan Recycles…”).
While the elements themselves are interesting to talk about it is often their presence in other forms, principally rare earth ore, rare earth oxides and rare earth metals that are more often discussed.
What are they worth?
Depending on whose data you put credence in, estimates of annual sales for rare earths in their raw form are comparatively small in economic terms — between $2 billion and a few billion.
It is the necessity for them in the manufacturing process of the auto, electronics, military and green tech industries (they need them for wind turbines and the like), and the ever-increasing demand for many of these products that, WHEN COMBINED WITH, the relative scarcity of the elements or ores outside of China that make REEs of far greater significance.
For now much of the manufacturing and assembly of consumer electronics remain in China and as long as companies can get their products to the big box stores or into the hands of online distributors most of us will hear little about REEs.
Geopolitics being what they are though, it will be interesting to follow how China handles exports of raw ore or refined metals to the many international companies that do still manufacture high-end military electronics, healthcare technology, and energy-generation technology among other things.
An interesting side note and tangent on all this is that we might soon have a better understanding of concentrations of rare earths on the Moon than we do on Earth thanks to satellites from several nations that are now in orbit around our closest celestial body.
Long-time Space.com columnist Leonard David wrote a great story on the possibilities, impracticalities, and strategic potentialities of mining rare earth elements on the Moon. The last paragraph, a quote from Carle Pieters, a leading planetary scientist in the Department of Geological Sciences at Brown University in Providence, R.I:
"Resource knowledge is one aspect of lunar exploration that certainly drives the non-US space-faring nations. It is disappointing that planners in our [U.S.] space program have not invested in that scope or time scale," Pieters added. "Other than the flurry over looking for water in lunar polar shadows, no serious effort has been taken to document and evaluate the mineral resources that occur on Earth's nearest neighbor. Frustrating!"
Even so, it would be totally cost-prohibitive to mine the moon, let alone ferry minerals or anything else back and get it through Earth's atmosphere to a manufacturing plant near you.
Some of the mining companies/conglomerates outside China involved in rare earths
- Lynas Corp. Ltd; There is a lot of interesting information available at their website including the basics on REEs, a periodic table, analysis of deposits they are after and their type as well as some pictures of the facilities they are building. The company has or is building facilities in Australia and Malaysia.
- Molycorp Minerals; Ditto on Molycorp's site. They also discuss a good bit on the need for REEs on the green technology and military front.
- Sojitz Corp.; Some of the stories and research I've done describes this as a Japanese trading company that is negotiating rights to a Vietnamese REE mine as but one small part of its many other areas of business.
- Sumitomo Corp. This industrial conglomerate is working with the government of Kazakhstan to reclaim rare earths from uranium ore residues among, other things.
This is just a smattering of what I've had the time to collect and research. Please share what you know and point me in other directions. One area of this I have not had time to tackle at all is whether any of these companies or others make up substantial portions of some of the alternative investment funds out there.
Related stories from other publications:
China Still Bans Rare Earth to Japan [New York Times]
Mining the Seafloor for Rare-Earth Mineral [New York Times]
China Unveils First Moon Photos From New Lunar Orbiter [Space.com]
Is Mining Rare Minerals on the Moon Vital to National Security? [Space.com]
Japan Recycles Minerals From Used Electronics [New York Times]
Amid Tension, China Blocks Crucial Exports to Japan [New York Times]
Rare Earths Shortage Expected by 2015 – Experts Gather in Hong Kong [NTD TV]
E-mail Davis D. Janowski at djanowski@investmentnews.com
