Investors are familiar with certain metals like gold, silver, copper, aluminum, and steel, but rare earth metals aren’t as well known. There are 17 metals typically considered rare earths and that are vital in many industries such as healthcare, energy, communications, electronics, and more. Despite the name, most rare earth metals are fairly common — on par with copper for rarity.
China is by far the world’s largest producer of rare earth metals with 105,000 tons mined in 2015. Number two on the list is Australia at just 10,000 tons. In fact, the next five biggest rare earth producers combined equate to only about 17% of China’s output. That makes the rare earth mining industry highly volatile and subject to price manipulation on a level greater than OPEC’s influence on oil prices. Even though these metals are essential for many industries, prices have hit rock bottom over the past few years and the future of the industry outside of China is still unknown.
Here’s a brief overview of all 17 rare earth metals and what they’re used for:
| Name | Atomic Number | Symbol | Main uses |
|---|---|---|---|
| Scandium | 21 | Sc | Primarily used to strengthen metal compounds. It is mined in Scandinavia and Madagascar. |
| Yttrium | 39 | Y | A diverse metal used in superconductors, cancer treatment drugs, medicines, color TVs, and cameras. |
| Lanthanum | 57 | La | Although used mainly in optics, this metal can also be found in waste and petroleum refineries. |
| Cerium | 58 | Ce | This metal is the most common of the rare earths and is used in automotive catalytic converters, glass polishing, various metal alloys, magnets, and more. |
| Praseodymium | 59 | Pr | It is used primarily in magnets but also to create high strength metals. |
| Neodymium | 60 | Nd | This metal is also used largely in extremely strong permanent magnets as well as infrared lasers, defense applications, and various other uses. |
| Promethium | 61 | Pm | A naturally radioactive element and also the rarest of the rare earth metals, it is used for pacemakers and scientific research. |
| Samarium | 62 | Sm | A diverse element, this metal can be found in various technological and medical applications as well as control rods in nuclear reactors. |
| Europium | 63 | Eu | This metal can be found in fluorescent bulbs and color displays. |
| Gadolinium | 64 | Gd | It is mostly used in medical applications like MRIs, X-rays, and other nuclear medicine applications. |
| Terbium | 65 | Tb | This soft metal is used in magnets and can change shape based purely on magnetization, making it useful in sonar and other electronic devices. |
| Dysprosium | 66 | Dy | Used in magnets, lasers, lighting, and nuclear reactors. |
| Holmium | 67 | Ho | Another metal that is used heavily in magnets. It's also found in control rods for nuclear reactors and microwaves. |
| Erbium | 68 | Er | This metal is used in fiber optics, lasers, and nuclear reactors. |
| Thulium | 69 | Tm | Another uncommon rare earth metal. It is used in X-rays, medicine, and meteorology. |
| Ytterbium | 70 | Yb | This metal is used in cancer treatments and earthquake-monitoring devices. It’s also used to improve stainless steel. |
| Lutetium | 71 | Lu | Used in a variety of applications such as dating meteorites, medical applications, and LED light bulbs. |
The Rare Earth Metals Industry in Recent Years
Worldwide economic weakness, especially in China, has depressed prices in the rare earth industry. Prices for many rare earth metals have fallen precipitously in the past several years with the only rare earth miner in the U.S., Molycorp, claiming bankruptcy.
In 2010, the industry seemed to be looking up with Molycorp’s massive expansion of the Mountain Pass mine and began taking market share away from China. But when China retaliated by relaxing its export rules, Molycorp was left holding the bag without the means to pay back its $1.25 billion expansion.
But Molycorp should be coming out of bankruptcy later this year. U.S. rare earth production fell from 5,400 in 2014 to 4,100 tons in 2015, and finding a source of metals outside of China is becoming increasingly important. Molycorp will face an uphill battle though, and investors should stay far away from this industry for the time being.
Final Consideration
New technological advances are slowly helping the rare earth mining industry by lowering costs and hopefully diversifying production away from China. But the industry doesn’t look like it will improve anytime soon with a lack of demand for rare earth. And the fallout from the Molycorp bankruptcy threw the struggling industry further into a tailspin. Investors may have to wait five years or more before the industry finally turns around.
