The term 'rare earth' arises from the rare earth minerals from which the elements were first isolated. These were uncommon oxide-type minerals (earths) found in gadolinite, extracted from a mine in Ytterby, Sweden, discovered in 1787. With the exception of highly unstable promethium, REE are found in relatively high concentrations in the earth's crust, with cerium being the 25th most abundant element at 68 parts per million and more common than copper. Cerium was discovered in 1803 when it was extracted from a mineral discovered at Bastnas in Sweden. Lutetium, the least common rare earth, is more common than silver.
So, at first sight, plenty of REE. Unfortunately not: REE are incredibly difficult to separate from their host rock and are also frequently found with significant levels of radioactive minerals. The similarity of the REE chemical properties made their separation difficult and it took another 30 years for researchers to determine that other elements were contained in the two ores, ytteria and ceria. The remaining rare earths were discovered through the 19th century and in the 1940s Frank Spedding developed an ion exchange procedure for separating and purifying the rare earth elements.
The principal sources of REE are the minerals bastnäsite, monazite and loparite and the lateritic ion-adsorption clays. Despite their high relative abundance, rare earth minerals are more difficult to mine and extract than equivalent sources of transition metals (due in part to their similar chemical properties), making REE relatively expensive. Their industrial use was very limited until efficient separation techniques were developed, such as ion exchange, fractional crystallization and liquid-liquid extraction during the late 1950s and early 1960s.
REE now surround us in our everyday lives by being a part of common high-technology and modern equipment. Of the more familiar applications of REE, neodymium is probably the most widely known as it is used in the light magnets found in earphones, mobile phones, hard disk drives and hi-fi speakers, among others. Europium is present in the LCDs (liquid crystal displays) of computer displays and flat-panel television sets, while fibre optic cables that power the Internet depend on erbium. The lenses in photo and video cameras are almost exclusively polished with cerium oxide and the even more popular high-efficiency fluorescent light bulbs contain a few different REE. Other common applications of REE include as catalysts in oil refining and as an aid for the cleaner burning of fuel in automobiles, in lasers, pigments, superconductors, medical imaging devices, as well as in a range of other metallurgical and nuclear applications. Important defence applications are anti-missile defences, jet engines, missile guidance systems and night visions goggles.
After decades in which they were considered little more than geological oddities, REE have recently become a boom industry. Global demand has quadrupled from 40,000 tonnes to 170,000 tonnes over the past 10 years, an annual market estimated at $12 billion. Annual demand is estimated to grow to 250,000 tonnes by 2020 (Kingsnorth 2011). Worldwide, the industries reliant on REE are estimated to be worth $4.5 trillion, or 5 per cent of global GDP. (Cahal Milmo January 2010).
There are critical factors in the supply and demand of REE that make them intriguing investment targets. Up to about 1985, the Mountain Pass mine in USA (undergoing rehabilitation by Molycorp) supplied much of global demand. During the following five years, China flooded the market with REE at prices well under the cost of production at Mountain Pass and other REE mines. By about 2005, China supplied over 95% of global REE demand and almost all alternative sources had ceased production. The extent by which green and new technology demands REE is such that many commentators consider that China's own demand will exceed its supply of REE by 2015.
Growth in demand over the past four years has exceeded 10% per year and is expected to plateau for a few years due to current global economic difficulties before growing between 2015 and 2020 at around 6.5% per year. At the same time, China has significantly reduced its REE export quotas, is reorganising the REE mining industry and introducing stiffer environmental standards. In short, with new technology and new products increasing demand for REE, the shortage of supply outside of China is likely to become critical over the next decade. This provides an opportunity for mineral exploration companies to discover and develop REE resources with the confidence of an assured market.
Finally, the prices of REE have responded to the threat of supply shortages. Indeed, prices rose so rapidly from 2008, even doubling in July 2011, that the market entered unchartered waters and expectations were clearly unrealistic. Since August 2011 average prices have dropped back by about 35%. Nonetheless, they remain substantially ahead of prices used by explorers in evaluating prospects in 2008-2010. While some argue that REE product prices will not be sustained, the economics for exploration and development of REE have surely changed dramatically.
Useful links
The following Internet sites provide broader information on the REE market and further background and history of REE. The links are provided as a convenience only and this does not imply endorsement by Kirrin Resources Inc. of the policies stated or the views expressed therein.
| • | Institute for Energy Research: | |
| (search 'rare earth elements') | www.instituteforenergyresearch.org | |
| • | Resource Investor.com | www.resourceinvestor.com |
| • | Rare Earth Investing News: | www.rareearthinvestingnews.com |
| • | Rare Metal Blog: | www.raremetal blog.com |
| • | US Geological Survey | http://minerals.usgs.gov/minerals/pubs/commodity/rare_earths/ |
