Investment involves making wagers about the future direction of society and environment. Sustainable or ESG investing aims to support companies that solve environmental and social problems through investments that address those issues.
United States companies depend heavily on rare earth elements for use in everything from fiber optics and computers, missiles and automobiles - though recently they were removed from tariff list; developing domestic supply will take time and investment.
Rare earth elements, known as "the seeds of technology", play an increasingly significant role in today's emerging technologies. Thanks to their magnetic, phosphorescent, and catalytic properties, rare earth elements enable miniaturization of electronic devices like iPhones and Apple AirPods; green technologies including General Electric wind turbines and Tesla electric cars; medical tools including Philips healthcare scanners; as well as defense hardware like F-35 jet fighters. Furthermore, rare earth elements play an increasingly vital role in efforts to reduce greenhouse gas emissions enough to avoid climate collapse.
China holds the world's largest reserves and most advanced production technology for rare earth metals, while also owning most separation facilities that help separate minerals for multiple uses - giving China unparalleled power over prices in global supply and demand dynamics.
Once upon a time, the United States held an impressively large share of the rare earth market; however, with China ramping up production it lost ground quickly. Chinese investors bought out major American producers in the 1990s and sent production overseas - helping create an artificial supply boom combined with high prices that drove out other competitors - until World Trade Organization complaints led China to loosen export quotas, flooding the market with abundant material, and sending prices down back down towards 2009 levels.
China currently mines and processes most of the world's rare earths, imposing price controls that it uses as political leverage in trade disputes with the Trump administration. But our experts confirmed that even if China decided to stop exporting rare earths altogether, other countries could produce them at much lower costs and effectively compete for market demand.
To test this theory, we compared return and volatility spillovers between the global REMX index and five financial markets - clean energy, world equity, base metals, gold, and crude oil - using return and volatility spillover analysis. Our results reveal that it typically moves alongside these other indexes while being particularly responsive to rare earth supply changes.
https://www.ilpost.it/2011/04/11/il-problema-con-le-energie-rinnovabili/
As China cut rare earth exports during a diplomatic dispute with Japan in 2010, the world scrambled to diversify their supply. Many efforts, from ocean floor extraction and harvesting from lunar dust craters to efforts at extracting them directly from space were proposed; but most efforts have thus far proven futile; even after investing $500 million in new pollution control at Molycorp Mountain Pass Mine in California for final processing, they now send their semi-processed ore to China due to current price levels being inaccessible to other producers.
Reducing China's dominance in REE supply poses significant difficulties; with few other nations possessing the technology required to mine or refine these metals and convert them into products such as permanent magnets. While many regions possess raw material sources for REEs, extracting valuable metals requires specialization techniques which make the task very complex; companies like MP Materials and Lynas have made efforts to invest domestic facilities but have faced formidable obstacles that limit their success.
One difficulty associated with REEs is their widespread distribution across numerous deposits; therefore it is impossible to identify those with the highest concentrations of those elements (Nd and Dy) most in demand (such as Nd). Furthermore, extracting them requires cutting-edge technologies that may prove challenging to implement at scale.
Policymakers must address these challenges head on by considering an array of options to increase supply chain resilience and foster sustainability, including regular stress tests and responses to potential disruptions, developing recycling opportunities, supporting research on technologies that reduce raw material needs in future, recycling programs, as well as recycling materials themselves.
This type of strategy can ensure that the 21st century doesn't face shortages in raw materials needed for clean energy and other essential applications, while providing the world with secure sources of rare earths essential for modern life. Africa should take full advantage of this opportunity; United States and other global powers should work with African nations to craft long-term strategies for tapping these critical resources while forging strategic trade partnerships that create resilient supply chains with global competitive supply chains.
As more countries shift to electric vehicles and cleaner energy sources, rare earth elements, cobalt, lithium and other minerals that go into making batteries and powering renewables become more essential than ever before. China dominates mining for these metals while also possessing much of the global processing and refining capacity that gives it greater control of price controls and exports.
China's dominance in rare earth resources has raised concerns in the United States and elsewhere that China could cut supply for economic or military gain, prompting President Biden to invest heavily in climate change technology while taking a hard line on geopolitics, with development projects that aim to use rare earths more efficiently and at lower costs - including West Texas' Round Top deposit which geologically suits this endeavor.
Success for this effort ultimately lies with whether the United States can quickly ramp up processing and refining after mines have been dug, while remaining cost competitive in an environment heavily dominated by China. Many analysts believe that successful reemergence in this industry requires private companies that possess both technical knowledge and capital that allow them to compete effectively against large multinational firms.
Lynas Corporation of Malaysia operates a separation facility for rare earth elements. They were given a contract by the Pentagon to construct a rare earth processing plant in Texas which should become operational by 2023. Aclara Resources Inc, another US mining firm is developing an approach that produces lighter rare-earth elements with less waste and higher efficiency than traditional methods.
Rare earth investments can be complicated due to their non-exchange trading nature; investors must therefore hold individual shares of mining and refining companies as investments in rare earths aren't readily traded on exchanges. A VanEck Vectors ETF that tracks these companies provides investors with exposure; its holdings are determined by oil, clean energy and general stock markets to reduce volatility while increasing returns.
https://londonirvinereport.blogspot.com/2010/09/very-different-century.html
Rare earth elements have long been utilized by manufacturers of high-tech goods for applications ranging from magnets and catalysts, as well as playing an essential role in green energy revolution and in defense applications.
But as demand for rare earth metals surges, relying on foreign suppliers will become increasingly challenging. In 2019, the United States imported 82% of its rare earth oxides (REOs) and metals - most from China - as part of its rare earth supply.
That makes domestic supply development even more critical than before, and many companies are working toward this end. Lynas plans to set up a facility in the U.S. by 2023 which would separate REOs into usable metals and alloys while producing magnets, diversifying its magnetic materials supply chain that currently relies on China.
Other companies are exploring ways to forego mining entirely. One such company is Ames Laboratory in Iowa, which has created chemical processes to separate rare earths without resorting to mining or harmful chemicals; now being tested at a pilot plant to see whether or not commercial production could follow.
Recycling rare earths directly is another option. Alloys composed of neodymium and samarium, for instance, are commonly found in some of the strongest magnets used to manufacture wind turbines and electric vehicles. One company, USA Rare Earth Resources, is working in partnership with a subsidiary of Toyota to establish a recycling plant in California that would accept used magnets before extracting metals from them for recycling purposes.
Due to these and other projects, some experts anticipate the U.S. will become a major exporter of REOs and magnets by the middle of this decade; however, building an adequate domestic supply will take time and will require producing alloys required by magnetic energy technologies and green energy solutions.
The Securities and Exchange Commission does not regulate these companies; therefore, this material should only be taken as general advice.