Rare Earth Metals

Rare earth metals are a group of 17 chemically similar elements that are critical to modern technology and industries. 

Despite their name, they’re not truly “rare,” but their extraction and processing are complex, making them valuable and sometimes difficult to obtain. 

This article goes into their properties, uses, and importance, along with the challenges they pose to global economies and the environment – and, of course, their financial aspects, including how they could potentially be traded.

Key Takeaways – Rare Earth Metals

• Lanthanides (15 Elements)
  • Lanthanum (La)
  • Cerium (Ce)
  • Praseodymium (Pr)
  • Neodymium (Nd)
  • Promethium (Pm)
  • Samarium (Sm)
  • Europium (Eu)
  • Gadolinium (Gd)
  • Terbium (Tb)
  • Dysprosium (Dy)
  • Holmium (Ho)
  • Erbium (Er)
  • Thulium (Tm)
  • Ytterbium (Yb)
  • Lutetium (Lu)
• Other Rare Earth Elements
  • Scandium (Sc)
  • Yttrium (Y)
• Abundance – Rare earth elements are more abundant in the Earth’s crust than gold, but they are rarely found in concentrated deposits.
• Global Production – As of now, China produces the majority of rare earth metals, but countries like the US and Australia are ramping up efforts to increase production.
• Applications – Beyond technology, rare earths are used in agriculture, water purification, and even glass polishing.
• Trading Rare Earth Metals – Rare earth metals aren’t traded directly on major exchanges but can be accessed indirectly through investments in mining companies, ETFs like VanEck Rare Earth/Strategic Metals ETF, or niche markets for futures contracts. Investors can also gain exposure by investing in technology companies reliant on rare earths, though this is less direct.

What Are Rare Earth Metals?

Rare earth metals consist of 15 lanthanides on the periodic table, plus scandium and yttrium.

These elements are known for their unique magnetic, luminescent, and electrochemical properties, which make them important (if not vital) in many high-tech applications.

Given their technological and military importance, they have high strategic value.

The Lanthanides

The lanthanides include elements such as neodymium, europium, and dysprosium. 

Each of these elements has specific uses:

• Neodymium – Key in producing powerful permanent magnets.
• Europium – Essential for red phosphors in color television screens and LEDs.
• Dysprosium – Enhances the durability of magnets at high temperatures.

Scandium and Yttrium

Though not technically lanthanides, scandium, and yttrium are grouped with rare earth metals because they often occur in the same mineral deposits. 

Scandium is used in aerospace components, while yttrium is important for LED and phosphor technologies.

The History of Rare Earth Metals

Early Discoveries

Rare earth metals were first identified in the late 18th century.

Swedish chemist Carl Axel Arrhenius discovered a mineral called gadolinite in 1787, which led to the identification of the first rare earth element, yttrium.

Industrial Applications

The use of rare earth elements expanded during the 20th century with the advent of color televisions, lasers, and nuclear technology. 

Their unique properties became essential for innovations in these fields.

Applications of Rare Earth Metals

Electronics

Rare earth metals are foundational to modern electronics:

• Smartphones – Contain lanthanum, terbium, and neodymium for screens, batteries, and vibration mechanisms.
• Laptops and Tablets – Relies on rare earths for display technologies and hard drives.
• Speakers and Microphones – Neodymium magnets are used in compact, high-performance audio systems.
• Camera Lenses – Lanthanum improves the optical quality of glass used in lenses, making smartphone cameras more efficient.
• Battery Life – Lanthanum and cerium are used in rechargeable batteries, improving energy storage and lifespan.
• Touchscreens – Indium-tin oxide, often doped with rare earths, enables touch sensitivity and clarity in screens.

Renewable Energy

These elements are vital in green technologies:

• Wind Turbines – Use neodymium magnets for efficient energy generation.
• Electric Vehicles (EVs) – Require dysprosium and praseodymium for powerful motors.

Defense and Aerospace

Rare earths are indispensable in defense applications:

• Guided Missiles – Utilize yttrium and terbium for navigation systems.
• Fighter Jets – Depend on rare earth alloys for lightweight, heat-resistant components.
• Radar Systems – Rare earth magnets, particularly those made with neodymium and samarium, are important for high-performance radar systems used in both defense and aviation. Europium and gadolinium are used in radar displays for enhanced resolution and clarity.
• Satellites – Dysprosium and praseodymium enhance the heat resistance and durability of components in satellites (for reliability in extreme space environments).
• Optical Sensors – Rare earth phosphors improve optical sensors used for imaging and communication.
• Drones and UAVs – Neodymium magnets power compact motors in UAVs. Cerium and lanthanum contribute to battery technology, which increase flight duration and performance.

Healthcare

Rare earth elements contribute to advancements in medicine:

• MRI Machines – Use gadolinium for enhanced imaging.
• Cancer Treatments – Lutetium and other rare earths play roles in targeted therapies.

Mining and Processing of Rare Earth Metals

Extraction Challenges

Rare earth elements are not found in concentrated deposits, making their extraction difficult.

They’re often mixed with other minerals, and separating them requires extensive chemical processing.

Environmental Impact

The mining and processing of rare earth metals can have environmental consequences:

• Radioactive Waste – Thorium and uranium are often byproducts of rare earth mining.
• Pollution – Processing involves toxic chemicals that can contaminate water and soil.

Major Producers

China dominates the global rare earth supply, accounting for approximately 60-70% of production. 

Other countries, including the United States, Australia, and Myanmar, are increasing efforts to develop rare earth mining.

The Geopolitical Importance of Rare Earth Metals

Global Supply Chain

Rare earths are a strategic resource, influencing international trade and security. 

Dependence on a single supplier, such as China, creates vulnerabilities for other nations.

Trade Wars and Supply Disruptions

Rare earth metals have been at the center of trade disputes. 

For example, in 2010, China restricted exports to Japan, causing global price spikes and highlighting the fragility of the supply chain.

Efforts to Diversify Supply

Countries are exploring new mining sites and recycling initiatives to reduce dependence on Chinese supplies. 

Greenland, Brazil, and Vietnam are emerging as potential sources.

The Science Behind Rare Earths

Unique Properties

Rare earth elements have unpaired electrons in their f-orbital, giving them special magnetic and optical characteristics. 

This makes them essential for technologies requiring precision and efficiency.

Magnetism

Neodymium and samarium are particularly valued for their magnetic properties, enabling the creation of powerful, compact magnets used in everything from headphones to wind turbines.

Luminescence

Europium and terbium contribute to vibrant colors in displays, making them valuable for modern lighting and screens.

Trading Rare Earth Metals in Financial Markets

Rare earth metals are not traded directly on major commodity exchanges like gold or oil.

Instead, traders/investors can access this market indirectly through stocks, ETFs, and contracts tied to companies involved in rare earth mining, refining, and production.

1. Investing in Rare Earth Mining Companies

Many publicly traded companies specialize in rare earth exploration and processing.

Examples include:

• MP Materials – US-based producer and currently the largest rare earth producer in the Western Hemisphere. They operate the Mountain Pass mine in California, which is one of the world’s most significant sources of rare earth elements.
• Lynas Rare Earths – Australian miner. They have mining and processing operations in Australia and Malaysia, and they are a key supplier of rare earths to global markets outside of China.
• China Northern Rare Earth Group – Chinese giant in rare earth production. This is one of the largest rare earth producers in the world.

Investors can buy shares in these companies to gain exposure to the industry.

2. Rare Earth ETFs

Exchange-traded funds (ETFs) focused on rare earths offer diversified exposure to multiple companies. Popular ETFs include:

• VanEck Rare Earth/Strategic Metals ETF (REMX) – Tracks companies in rare earth mining.
• Global X Lithium & Battery Tech ETF (LIT) – Includes rare earth metals critical to battery production.

3. Futures and Contracts

Rare earths aren’t widely traded in futures markets, some contracts may exist for key elements like neodymium.

These are typically available through niche or over-the-counter (OTC) markets.

4. Indirect Access via Tech Companies

Investors can gain highly indirect exposure by investing in technology companies heavily reliant on rare earths, such as Apple.

Risks and Considerations

Rare earth markets are volatile, with prices influenced by geopolitics, supply chain disruptions, and environmental regulations. 

Diversification and careful research are important.

Environmental and Social Concerns

Environmental Degradation

Rare earth mining can result in deforestation, soil erosion, and water contamination. 

These activities often take place in ecologically sensitive regions, exacerbating environmental issues.

Human Rights Issues

Mining operations in some regions have been linked to exploitative labor practices and poor working conditions. 

Ethical sourcing is a growing concern for companies and governments.

Innovations in Rare Earth Technology

Recycling Initiatives

Recycling rare earth metals from old electronics is a potential way to reduce environmental impact and reliance on mining. 

The process nonetheless remains technically challenging and expensive.

Alternative Materials

Researchers are exploring substitutes for rare earth elements in technologies like magnets and batteries. 

Progress has been made, but few alternatives match the efficiency of rare earths.

Advances in Extraction

Innovations in extraction techniques – e.g., bio-mining and advanced separation technologies – try to make the process cleaner and more sustainable.

Rare Earth Metals and the Future

Growing Demand

The demand for rare earth elements is expected to grow a lot with the expansion of renewable energy, electric vehicles, and advanced technologies. 

Getting a stable supply is critical to future technological progress.

Policy and Regulation

Governments worldwide are developing policies to secure rare earth resources. 

Countries cutting off other countries from access to rare earth metals would be a clear indication of conflict in the same vein of the US cutting off Japan’s access to oil in the early 1940s.

Investments in domestic production, international partnerships, and research are key strategies.

The Trump administration’s interest in Greenland is heavily believed to be about rare earth metals.

Role in Decarbonization

Rare earth metals will have a role in combating climate change by enabling green technologies.

Their efficiency in energy conversion makes them important in the transition to a low-carbon future.

Conclusion

Rare earth metals are the silent enablers of modern technology and innovation.

Their unique properties have transformed industries ranging from electronics to renewable energy.

Their extraction and use nonetheless pose environmental and ethical challenges.

As demand grows, balancing technological advancement with sustainability will require global cooperation, innovation, and responsible practices.