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How to Invest in Rare Earth Metals

By Edited Nov 13, 2013 1 1

China supplies 97% of the world's supply of rare earth metals. Since these elements are so important in the production of alternate energy production facilities, China has decided to control the supply so as to improve their national industries. The world should take notice. If the supply of rare earth metals is limited, then costs are likely to increase for companies that rely on them. At the very least, extensive re-engineering may be necessary to incorporate alternate materials. This, of course, represents a cost for the companies even if the replacement elements are price competative.

In addition to Chinese rare earth metal suppliers, several other companies have been investigating potential deposits. Investors should take note of some of these firms. When these companies bring their production facilities into operation, they should be able to take advantage of a market that is looking for alternatives to the Chinese suppliers. Even if China does not drastically restrict the supply of their materials, they remain an uncertain supplier. They have such a strong control at present that they could restrict shipments at any time, change the pricing structure of the whole market or impose new taxes as they see fit. The country has already done all of these in the past.

Many of the world's rare earth metal suppliers not located in China list their stock on the Toronto Stock Exchange. This exchange lists many mining companies of all sizes. A few are involved in the exploration and development of rare earth mineral deposits. One such company is Great Western Minerals Group. It is involved in the production of materials and research into their further applicability. They have established several affiliates that produce rare earth metals, explore raw materials and supply elements necessary for the production of permanent magnets. With their integration in several aspects of the metallurgy field, Great Western Minerals Group represents an interesting equity postion for some investors. The company is very small, however, so investors should consider stock in the company as part of the speculative holdings in a balanced portfolio.

Mining companies listed at Toronto are shown on their web site www.tsx.com. In addition, the companies may be listed elsewhere. Several smaller entities trade on the OTCBB market in the United States. Confirm your investing options with your stock broker account holder.

Investors interested in Great Western Minerals Group should check the web site at www.gwmg.ca and study the investor materials. The company has released news as of March 2011 which indicates a small change in one project. The company is diversified which may become important in the future as new markets are developed.

With the uncertainty in the rare earth metal market, brought by the dominant position of China, many companies welcome the addition of other supplying firms. When 97% of a commodity is available from a single country, adequate supply is not assured. Any number of factors could affect the availability of the resource. This could have impacts on prices as could new taxes and shipping restrictions. Markets can only be dynamic and stable with much more choice than currently exists in the rare earth metal supply market.


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Comments

Feb 21, 2013 12:12am
KCAllen
What are some examples of rare earth metals and how they are used in manufacturing?
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