From electric vehicles and wind turbines to water treatment and nuclear power, rare earth elements (REE) are critical for many of the technologies necessary for a cleaner, greener economy and world. However, understanding pricing for these commodities can be tricky.
Read on for a short introduction to the rare earth elements market and prices.
China has such a monopoly on the sector that REE prices spiked in 2010 and 2011 when the country cut exports. That sparked a boom for rare earths companies and mining projects around the world, as they sought to create reliable sources of rare earths supply outside of China. However, many failed to thrive when REE prices fell again.
The ongoing trade war between the US and China adds a layer of complication to the rare earth metals sector. Recognizing China’s key place in the market, the US is undertaking various efforts to build its own supply.
Even with these efforts, China remains the heavyweight for now, so it’s important that investors interested in the rare earths space keep track of what the country is up to in terms of production.
Unlike prices for gold and silver, rare earth elements prices are hard to come by, as there is no widely used public exchange for rare earths. Firms such as Fastmarkets put out regular price assessments based on surveys of traders, consumers and other market participants; this information is available for a fee.
Price forecasts and other information can also be found via analyst firms and pricing forums such as Adamas Intelligence, Argus Media, Technology Metals Research and Asian Metal.
Rare earths are used in a range of different technologies, and demand is higher for some than others. They can be divided into “heavy” and “light” categories based on atomic weight, with heavy often being more sought after.
The concentration of different rare earths varies within each given deposit, but usually a deposit is dominated by either heavy or light rare earths, with some elements being much more abundant. Cerium, for example, is the most abundant rare earth, and is more plentiful in the Earth’s crust than copper.
Both cerium and lanthanum, used in things such as alloys in steelmaking and industrial catalysts, are oversupplied. As a result, they are priced quite a bit lower than most rare earth magnet materials.
Think rare earths are easy to separate? Think again.
It’s important to keep in mind that rare earths within a mixed concentrate won’t fetch as high a price as those that are already separated. When looking at technical reports from junior miners, be sure to check that companies have accounted for this discount when calculating their rare earths basket price, which is the price for all the rare earths bundled into a single number based on the distribution of different rare earths within the deposit.
This is an updated version of an article originally published by the Investing News Network in 2015.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Energy Fuels is a client of the Investing News Network. This article is not paid-for content.
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