The Booming Market of Rare Earth Elements: What It Means for Investors

Rare earth elements are experiencing rapid growth on the market. Neodymium magnets made with these elements help reduce electric vehicle circuit sizes by using less magnet material in them, for instance.

China can be an essential supplier, yet this can leave companies vulnerable if a trade war or other disruption disrupts China's supply chains.

Demand for Rare Earth Elements

Rare earth elements might not make headlines on Wall Street, but these precious metals remain essential components of many emerging technologies and there simply aren't enough of them available for everyone's use. With green tech and energy efficiency becoming ever more popular, rare earth metals have seen increased demand to improve performance while simultaneously decreasing operating costs.

Rising consumer durable manufacturing in emerging nations has also increased rare earth metals demand. India's HP Development Company L.P. recently started producing laptops as part of the "Make in India" initiative, which should stimulate electronics industry growth while driving demand for rare earth minerals.

Alternative energy sources, including nuclear power, have increased rare earth mineral consumption significantly in recent years. Furthermore, government regulations pertaining to carbon emissions could spur more unconventional energy production methods and lead to further increases in consumption of rare earth minerals.

China is the largest supplier of rare earth elements and their government has tightened export restrictions to safeguard their stockpile, leading to an international shortage.

Since 2010, prices for rare earth elements have been volatile. An international incident between Japan and China over disputed waters led to an embargo that lasted several years; China used it as leverage against Japanese high-tech manufacturers by blocking export of raw materials necessary for manufacturing high-tech devices. Only after filing a World Trade Organization grievance from the U.S., Japan and Europe did Chinese export quotas loosen sufficiently to allow prices to return to 2009 levels.

DBMR's rare earth elements market report provides in-depth segmentation analysis, market share estimates and growth forecast data for global, North America, Europe, Asia-Pacific and Middle East and Africa markets. Furthermore, opportunities such as emerging revenue pockets or changes in regulations are identified as well as import/export analysis, production optimization strategies, value chain optimization techniques as well as competitive landscape profiles of major players operating within this market.

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Environmental Impacts of Mining

Rare earth elements are an indispensable component of modern technologies ranging from magnets and catalytic converters to hybrid electric cars, yet mining them comes at great environmental cost. According to Harvard International Review article, producing one ton of rare earth elements results in 30 pounds of dust production as well as 9,600-12,000 cubic meters of toxic gas emissions such as sulfur dioxide and hydrofluoric acid emissions. Furthermore, mining often damage ecosystems by stripping the topsoil away and leaving behind toxic debris on nearby land surfaces and leaving behind toxic tailings which contaminates water resources as well as leaving toxic messs behind on surrounding lands resulting from stripping of topsoil from surrounding land which leads to ecosystem degradation or damages ecosystems completely.

China is the primary source of rare earth metals on the market; approximately 80 to 90% come from Chinese mines. Most mining activity takes place at several large sites within Inner Mongolia that cover an area roughly the size of Florida; mining in Inner Mongolia has also contributed to increased pollution in this region and an acceleration in desertification by clearing land to dig for ore. As this expansion pushes southward along its Gobi Desert boundaries.

Although our nation has taken some steps to reduce its environmental footprint, these aren't going far enough to make an impactful difference in industry's footprint. A more sustainable strategy would require governments to support research into products which use fewer rare earth metals or use alternatives with lesser ecological harm; also investing in energy efficient mining methods; and initiating recycling programs for used electronics.

Recent production of rare earth elements has been focused on China. But rare earth minerals can still be extracted in India, Brazil and Malaysia; and an Australian mine could begin delivering concentrate for processing in 2022.

This growth is being fuelled primarily by surging consumer electronics demand in emerging economies as more people transition to the digital economy, driving demand for laptops and tablets. At the same time, global automotive production is also expanding - driving rare earths demand for magnets and catalytic converters to cut carbon emissions while cleaning up vehicle exhaust emissions.

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Investment Opportunities

Rare earths may not be as rare as their name implies, but due to technical, environmental, and geopolitical challenges associated with extracting and producing them they exist at the lower end of the supply/demand curve, making them an attractive investment opportunity for those hoping to capitalize on tech industries' long-term expansion.

An average rare earth mine takes at least five years to become operational, as production requires extensive topographical mapping, infrastructural investments and large capital expenditures. Due to their sensitivity to contamination and difficult separation methods, rare earth minerals are expensive to produce while current production methods generate large volumes of toxic waste.

Due to these reasons, the rare earth market tends to be dominated by large companies rather than individual retail investors. Furthermore, it can be highly volatile due to sudden supply or demand issues; many experts therefore feel that institutional investors would make better use of rare earth investments than individual retail investors.

China currently leads the global market for rare earth elements due to its vast manufacturing infrastructure for electronics that require them. Furthermore, they boast strong leadership in renewable energy sector with many large factories producing electric cars using Neodymium magnets.

Demand for rare earths is also rising in developing nations as industrialization, building, and construction activities, and government initiatives to promote digitalization increase. Furthermore, high wind speeds fueling wind turbine development further drives demand for rare earths.

As is important to recognize, COVID-19 outbreak and tension between China and US trade relations have had two opposite outcomes on REM markets: increasing reliance on one supplier for REMs while at the same time creating greater resilience within renewable energy market which may help ward off any cartelization attempts (Kim and Karpinski 2020).

VanEck Vectors Rare Earth/Strategic Metals ETF is an effective way to invest in this dynamic sector. The fund invests in companies that extract and process rare earths as well as technology companies that rely on them.

Risks

Rare earth metals have long captured the interest of investors looking to enter an emerging industry with long-term returns, yet come with unique risks unique to emerging markets and commodities. Rare earth metals are in short supply due to being controlled by only a handful of large and secretive mining companies; when demand meets supply, rare earth metal markets become volatile.

At the height of COVID-19 pandemic, incidents between China and Japan in disputed waters resulted in Chinese customs agents holding up rare earth oxide shipments intended for Japanese high-tech manufacturers, leading to an unprecedented price surge.

Since then, the significance of metals has become ever-more profound as countries fear losing access to materials they require for weapons and technology development. Fear of losing this vital resource has inspired creative solutions including opening the Amazon rainforest up for mining or even harvesting metals off of the moon; yet none have proved profitable; even Molycorp filed for bankruptcy before being bought out and restructured and now exports Mountain Pass ore to China for processing.

Though rare earth elements present some hurdles to their use in the future, many believe they could play an integral part of it. Their production can help produce solar panels, wind turbines and other green energy technologies; as well as magnets, metallurgy and catalysts. Furthermore, rare earth elements could play an essential role in efforts to curb greenhouse gas emissions enough so as to prevent climate collapse.

The report offers detailed insight into the rare earth elements market's competitive landscape, providing details such as company overview, financials, revenue generated, investments made in research and development, new market initiatives, global presence (production sites/facilities/production capacities/strength/weaknesses), product launch/width/breadth/application dominance as well as strengths/weaknesses. Furthermore, this report analyzes global competition by country (US/CA/Mex/RU/RU, Italy/France/UK/UK Italy/Bel/Netherlands Switzerland/Russia/ Turkey Spain/Rest of Europe/Rest of Europe/ Russia Turkey Spain/Rest of Europe/Rest of Europe/Rest of Europe/Rest of Europe/Rest of Europe/ Russia Turkey Spain/Russia/TUR/TUR/TUR/TUR + Russia + Turkey Turkey Spain etc) plus end use industries such as magnets/metallurgy, ceramics glass production/polishing). Additionally the rare earth elements market report gives detailed analyses by country (U.S. Canada/Mex/MX), country (Germany France U.K Italy U.K UK Italy Belgium Netherlands Switzerland Russia Turkey Turkey Spain Spain Russia Turkey Turkey Turkey Spain etc) plus end use industries (U.U). Additionally there'sa + Rest Of Europe); country (U) along with end user industries like magnets). Additionally) and end use industries (like magnets metallurgy ceramics ceramics glass polishing). Spain + Rest Of Europe). In addition to these rare earth elements market report includes details for example that U/CAN Mexico+ Germany =US&CO= Germany France U+ UK U+ U+ UUK U+ U+ U+ U UK Italy U UK U+ UK U+ Switzerland Russia +Russia Turkey+ Russia+TR + Spain+T+ Turkey + Rest + SPAIN+ SPAIN +B)+ rest). Germany Canada + US). Plus end use industries as well as end uses industries i + Rest Spain + Rest Spain + rest OF European (R+ SPAIN+Russia Plus Turkey + Spain plus end used industries which may/ Turkey Spain). Additionally this also gives details regarding global competitors by country/country which also compares US+ etc ). Additionally. Also used as well.+ France+ U K + German Italy +U +US=). PLUS USA+ US + rest =+, US =+ UK Italy Belgium UK etc = + U...) > US +UK Italy...and Switzerland Russia Turkey + rest.. Russia Turkey+ Spain = Rest re = etc... which T + Rest). Finally. Spain + Rest.T Spain in terms end-related end uses industries (N and Rest (s). Also provides comparative/. Plus for which also which end use industries: Germany = UUK Plus Russia etc.... Plus/ UK). Plus for global competition against Russia Turkey + rest) plus also Russia Turkey + etc...plus Poland plus end + Russia Turkish + Rest Europe) then Switzerland Plus Turkey +. Russia Turkey+ Russia+ Spain etc). Germany France U +.... plus all EU!; US. Turkey etc). Plus theres Spain etc). ****etc). Finally Spain). In European). + Rest). Turkey Spain which). Russia Turkey) etc, U v