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Rare earth companies are those special miners that are hunting for, and producing, the little-known batch of elements. There’s a really good chance your chemistry teacher skipped over these items, and you may not have glanced far enough down the periodic table to even notice. Nevertheless, the rare earth elements, or rare earth metals, are a unique group of vitally important items that are central to our modern way of life.
They are found in a myriad of military applications, cell phones, televisions, and windmills. The Toyota Prius alone is said to use about sixty-eight pounds of lanthanum and in excess of two pounds of neodymium for the batteries and electric motor! Wind turbines require an enormous amount of neodymium as well. A magnet made from neodymium is combined with dysprosium to create a magnet that is now able to function even under the high heat conditions of areas surrounding a car’s engine. This quick list of examples shows the widespread uses for just one rare earth element, neodymium!
Rare Earth Companies And The Simple Law Of Supply And Demand
Rare earth companies are benefiting from the fact that demand for rare earth elements (REEs) has grown faster than the supply. Other than China, most nations have been quite sluggish about securing ample supplies of these metals. For a time, China was cheaply producing them as mere by-products from other mining activities. They were able to subsequently flood the market with inexpensive REEs, which made it cost-prohibitive for miners to develop deposits unless they were incredibly rich. Today, however, China is actually restricting and choking back exports of REEs as it is consuming a growing amount of what it mines. Rising prices have enabled mining companies to again look to locate and produce these necessary ingredients.
Rare Earth Companies – How Uranium Producers Have A Head Start
Small rare earth companies that successfully locate and develop rare earth deposits stand to do exceedingly well. The demand for rare earth elements stems not only from a growing number of uses for them, but also from a growing number of people desiring all of the gadgets and luxuries of life that consume these elements in sizeable proportions. The developing world literally has billions of people who are improving their quality of life. The rare earths play a big part of that.
Companies like Quest, which primarily seemed to be involved in uranium, are enjoying the opportunity to hop on the rare earth bandwagon. The addition is ideal, as both REEs and uranium tend to be found together. For instance, this company is working with the Strange Lake ground in Quebec. They are finding rare earths with per ton gross rock values over three hundred dollars. With prices of REEs increasing, such deposits can become increasingly profitable. The share price of the company rose as high as 12-fold in a one year period of time. The lure of these big profits to fill this void has companies looking for deposits all over the globe.
Rare Earth Companies And Why Only The Strong Will Survive
One of the greatest challenges rare earth companies face is actually processing the material to create a useable substance in the end. Refining to end up with oxides that can be put to use is especially tough with the so-called heavy rare earth elements, or HREEs. It is estimated that these make up only about 5% of all rare earth metals. Extracting and purifying them is so difficult because they arise naturally in mineral deposits that are often convoluted and hard to segregate.
For reasons such as these geological challenges, it takes expert company management to succeed. The size of the REE deposit may not even be as important as the grade of what’s in the ground. In a real sense, all that glitters is not necessarily gold. While the REE boom will bring many companies onto the scene, the truly rich rewards will likely only come to a select few companies. In fact, some experts guess that only 15 to 20 of the expected one hundred or so “rare earth miners” will have any measure of success. Key to their survival will be ample cash to sustain the volatility of the market. Rare earths have already seen surges in 2009 and 2010, with profit taking to follow.
Rare Earth Companies With An Eye Towards Forecasting The Future
The future for well-poised REE miners is bright. It takes some time to discover deposits, put in place infrastructure, and eventually bring to market usable oxides. In the meantime, consumption of these metals happens at an alarming pace. Demand is not likely to wane due to both increased users and increased uses.
Further, the market can bear extraordinarily high REE prices. Just as uranium is a small part of the input for nuclear power generation, REEs tend to comprise a relatively small part of the final product created with them. Yet, they are essential and irreplaceable. For that reason, the manufacturers of goods can absorb rapidly rising REE prices without too much difficulty.
Finally, green technologies are impossible without rare earth companies bringing REEs into production. Governments will be in a race to hoard these unique substances. The market conditions really couldn’t be better for rare earth companies at this time making them some of the best stocks to buy now.
