When investing in rare earths, mining companies that extract and produce them are best. Look for those with proven record of stability and profitability while having low environmental impact.
Investors can also invest in recycling companies that process and recycle rare earth elements, or exchange-traded funds that offer exposure to multiple mining and recycling firms.
Imagine that one day when your phone stops working, computer freezes up, and car won't start: these problems could all be related. Most likely one of 17 metallic elements on the periodic table known as rare earth elements has malfunctioned, rendering these vital components non-replaceable.
REEs are used in an extensive range of modern devices and technology, from magnets in small motors to catalytic converters used in petroleum refining; glass additives and polishing compounds; television/computer screens; lighting/X-ray machines/X-ray machines/ rechargeable batteries as well as being key elements in wind turbines/EV batteries technologies.
investors can gain exposure to rare earths through shares in mining companies that specialize in rare earth elements (REEs). Mutual or exchange-traded funds that track REEs such as VanEck Vectors Rare Earth/Strategic Metals ETF (REMX) also track these minerals; but without any traded futures for REEs it can be challenging knowing exactly what to look out for when selecting mining companies.
Diversifying REE investments is best achieved through stocks of companies that extract and process rare earths themselves, rather than mining companies. Such stocks tend to be less volatile as they do not tend to move in tandem with traditional investment assets like stocks and bonds. They may also provide an opportunity to invest in cutting-edge technologies that may form the cornerstone of an emerging industry.
As with all alternative investments, rare earths investment carries inherent risks. If you invest in Chinese REEs produced by Chinese companies, for instance, then you are exposed to their political and economic instability; though taking this risk might open up access to an incredible market with enormous potential, but be wary when making your decision.
Mining of rare earths can be both complex and time consuming, requiring multiple permits and infrastructure in remote locations - this can add up to considerable upfront capital requirements, leading to delays and delaying production. But as demand for rare earths increases, more companies have entered the industry, potentially making accessing resources easier in the near future.
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Dysprosium, neodymium, praseodymium and terbium are essential elements for many high-tech applications, thanks to their high value density and recycling potential. Their versatility makes them suitable for magnets, ceramics, optical coatings and batteries; and can often be extracted directly from the ground in oxide form that can later be processed further to produce rare earth metals.
China has long dominated the rare earth mining sector and remains the top exporter. But in 2010, when they reduced REE export quotas dramatically, prices surged and raised concerns that China might exert too tight of control over these minerals. That sparked investments into REE exploration all around the globe and mining companies like Lynas (ASX:LYC and OTC Pink:LYSCF) emerged with their mine in remote western Australia that uses fossilized lava flows to extract rare earth minerals.
Remember that rare earth elements are finite resources and that a global supply chain must be put in place in order to guarantee future demand for these minerals. With this in mind, investors may focus their attention on large mining companies with proven mining and processing techniques as well as market shares that support reliable production with strong cash flows and steady production levels.
Investors seeking exposure to rare earth elements should consider the VanEck Vectors Rare Earth/Strategic Metals ETF (REMX). This fund offers exposure to REE producers from all around the world with some Chinese exposure, making for an excellent way to gain global diversification of REEs. For investors wanting direct exposure in individual companies, the iShares Rare Earth Minerals ETF (IREM) may also provide good opportunities.
Investors should keep in mind that technology is an ever-evolving industry and that alternatives for rare earth elements could emerge soon. Electric vehicle motors could soon employ smarter designs which allow cars to cover more miles with limited resources while maintaining safety and convenience for passengers. Car-sharing services or mobility-as-a-service operations could even replace certain specialized components used in electric car batteries altogether.
Investors seeking rare earth metals exposure have various ways of tapping this sector. One popular strategy is exchange-traded funds such as VanEck Vectors Rare Earth/Strategic Metals ETF (REMX), which offers exposure to an array of companies involved with mining, refining and providing critical technologies using rare earths.
Investors should prioritize companies with the ability to capitalize on rising demand for their products, particularly as the world transitions away from fossil fuels toward green technology. Elements like neodymium and praseodymium (found at Lynas Rare Earths Ltd) are used in powerful magnets used in electric vehicles and wind turbines, providing investors with exposure.
Attracting reliable companies that deliver on their promises is also key, meaning ensuring the company has a plan in place to deliver resources on time and within budget. This can be especially challenging with projects located in remote places with complex exploration processes.
Investors should seek companies committed to sustainable mining practices. While few rare earths companies boast sustainability narratives in their business models, newcomers in this space promise to revolutionize how rare earths are mined using eco-friendly extraction techniques and efficient extraction techniques.
Investment in rare earths exploration companies can yield substantial returns, but it's essential that investors first gain a clear understanding of their nature, applications and the risks versus returns involved. Furthermore, companies with the infrastructure in place to process and supply rare earths globally are the top choices among investors; this includes MP Materials Corp of the US and Lynas Rare Earths Ltd in Australia as major producers that possess proven exploration techniques as well as market shares that will satisfy anticipated future demand - these examples include MP Materials Corp in the US and Lynas Rare Earths Ltd respectively.
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Rare earth elements (REEs), once thought to be little more than geological oddities, have recently made headlines due to hybrid car sales and renewable energy technologies' surge in popularity. Unfortunately, REEs are scarce resources controlled by only a few large mining firms; when demand meets scarcity prices are likely to spike; one way of taking part in this market would be investing in rare earth mining companies themselves; however this investment carries its own set of risks and return opportunities.
One of the major obstacles facing rare earth explorers today is structural scarcity, compounded by China's control over most global REE production. As China currently accounts for most REE output worldwide, supply disruptions that arise can have wide-ranging repercussions if supply disruptions take place - and require significant investments for projects to go forward. To reduce dependence on China as an REE source, rare earth explorers are working toward finding high-grade deposits which can be mined and processed more efficiently than before.
Avalon Rare Metals is leading this charge with its Thor Lake deposit in northern Canada, where Avalon Rare Metals expects to produce some of the first heavy REEs such as terbium and dysprosium which are more valuable than lighter neodymium - essential components in high-tech applications such as 5G mobile communication standards and modern X-ray technology.
Lynas Corporation of Australia stands out as another key player, producing and processing rare earths in Malaysia and Texas with 14% global market share and plans to open a processing plant that will increase output capacity by 40% in Texas by 2022.
Investors looking for exposure to rare earths can also gain exposure through investing in the VanEck Vectors Rare Earth/Strategic Metals Exchange Traded Fund (REMX). This ETF holds various REE producers and processors from China, America, and Australia; for those preferring individual stocks instead, a number of companies are working on innovative mining processes that improve yields while decreasing production costs.
As with other high-value materials, rare earths should be stored securely away from any banking system to preserve their original condition and authenticity. Companies like Swiss Gold Safe provide professional storage with insurance coverage to safeguard these valuables.