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A Road Map To Technology Metals - Part 2: Rare Earths

Friday September 13, 2013 14:21

According to the periodic table of elements there are 17 rare earth metals. For your convenience, I placed a complete list of them at the back of this article. Depending on context you will find them referred to as “REE” (rare earth elements) or “REO” (rare earth oxides) in market reports.

The peculiar thing about rare earths is that they aren’t actually rare on earth; many of them exist in higher concentrations than gold or silver. But they aren’t evenly distributed. Most of them are found in China; they either occur in small concentrations or are extremely hard to produce due to their toxicity, flammability or other properties. Environmental standards in many other countries with rare earth metal resources prohibit mining.

What makes them interesting to engineers and investors alike is their use in practically any high-tech application currently available: automotive, consumer electronics, flat screens, air and space, lighting, photovoltaic and many more.

In today’s high-tech world, rare earth metals are an integral component to all semiconductors contained in a device. For example, their magnetic properties make them essential as micro-magnets used in speakers, and their light refraction property is useful in camera lenses to increase the camera’s capabilities in low light conditions and for wide angle shots.

As mentioned above, China holds most of the resources (between 80 and 97% of each metal). On top, China – like the U.S., the E.U. and many other countries in the world – has recognized the strategic importance of these metals and is building reserves.

From an investor’s perspective it is important to separate the ones that are stable and in industrial demand from the rest of the group which are instable and of lesser relevance, at least today. The “relevant” group is typically referred to as “heavy” rare earths. A service sector is emerging making these metals more available to physical investors. They can be purchased, stored and sold. The rare earth metals available to investors are: cerium, europium, gadolinium, lanthanum, terbium, yttrium, neodymium, praseodymium and scandium.

Not surprisingly, governments around the globe have recognized the crucial importance of these materials. Organizations like the U.S. Geological Survey or the European Union periodically publish lists of critical materials. As you will see, these lists go far beyond the metals we have covered in this series so far – there is much more to discover; China, the largest resource and largest consumer of rare earth metals worldwide, is more guarded in providing detailed information. However, China is known to build stockpiles of specific metals and some industry sources predict prices to emerge soon from their current low because of that.

Information is key for investing in this sector and unfortunately publications available on worldwide supply and demand are sometimes contradictory. And while more transparency in this market is desirable, there is an equal amount of anxiety that investors might take a better aim at specific metals, thereby upsetting the respective markets.

The following is a second slide for my series on Tech Metal Applications. This one is on electronic devices for which I selected smart phones as an example. Please note that the information provided does not apply to the particular phone shown; it is applicable to the market segment. Materials used vary for each manufacturer and model sold.

 

Part 3 of this special will cover specialty metals and battery materials.

A list of Rare Earth Elements:
Ce – Cerium
Dy – Dysprosium
Er – Erbium
Eu – Europium
Gd – Gadolinium
Ho – Holmium
La – Lanthanum
Lu – Lutetium
Nd – Neodymium
Pr – Praseodymium
Pm – Promethium
Sm – Samarium
Sc – Scandium
Tb – Terbium
Tm – Thulium
Yb – Ytterbium
Y – Yttrium

By Bodo Albrecht
tminsider@eniqma.com

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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