The Rare Earths Boom

Most investors and consumers have still never heard of metals like neodymium and terbium, but without rare earth elements (REEs) there could be no iPods, hybrid electric vehicles or color televisions; in many cases there are no known substitutes. Supplies of REEs will remain tight for years to come as there are no major new mines operating outside China and only two are scheduled to open over the next few years. Here’s a look at the booming REE industry and the stocks best positioned to profit.

There are 17 REEs consisting of the 15 elements in the lanthanide series plus scandium and yttrium. These elements are collectively known as REEs because they share similar chemical properties and tend to be found together in nature – the table below lists all 17 elements as well as an estimate of their abundance in the Earth’s crust.

The term “rare earths” is a misnomer as many of the REEs are actually quite common – cerium is the most abundant REE and is almost as common as nickel or copper. Even the rarest of the REEs are roughly 200 times more common than gold and significantly more abundant than silver. The only exception to this rule is promethium, which is unstable and occurs naturally in only the tiniest of quantities. The element is so rare that it has no real commercial application and is often excluded from discussions of REEs.

REEs are generally divided into two categories, light rare earths and heavy rare earths. The light REEs include the elements on the table above with the lowest atomic numbers: lanthanum, cerium, praseodymium, neodymium and samarium. Since light REEs are generally far more abundant – often accounting for well over 90 percent of a given deposit – they’re also less expensive than the more uncommon heavy REEs.

REES are typically sold in processed form as rare earth oxides (REOs). Oxides of the heavier REEs, including europium and terbium, are particularly valuable, fetching well over $600 per kilogram. 

What makes REEs rare is that they are seldom found in ore form in sufficient quantity and concentration to be produced economically. There are only a handful of known deposits around the world that are rich in REEs. In addition, there’s no way to mine solely for the higher-value heavy REEs like europium – both light and heavy REEs naturally occur in all deposits in varying quantities. Get the full story in our free report titled: REE Stock Investing Made Easy: How to Investing in Rare Earth Stocks the Smart Way