Rare Earth Metals: Heavy vs. Light

Both light and heavy rare earth metals are versatile and play a vital role in manufacturing electronics.

rare earth metals

The 17 elements that make up the group of rare earth metals are diverse in their applications and market dynamics. They are often broken up into two categories according to their atomic weight: light and heavy.

Overall, the different rare earth metals play a huge role in the development of green technologies. They are often used in electronics like laptops and smartphones, as well as spacecraft and missile weaponry. Growing demand for batteries and green technology is adding to their importance and versatility as well. 

Light rare earth metals

All rare earth metals are part of a chemical group called lanthanides, and light rare earths represent the lanthanides with the lowest atomic numbers. Light rare earths include: cerium, lanthanum, praseodymium, neodymium, samarium and scandium.

Of the light rare earth metals, neodymium is considered one of the most critical. The metal is used in everything from mobile phones and electric cars to medical equipment. Neodymium is also the main light rare earth used in the creation of permanent magnets. These magnets are incredibly versatile and are heavily used in data storage systems and wind turbines.

Praseodymium is also a significant light rare earth metal. It is used in alloys with magnesium to form aircraft engines. It also finds use in the film industry for studio lighting and other projects. Like many rare earth metals, praseodymium plays a role in creating permanent magnets as well.

Heavy rare earth metals

Heavy rare earth metals are defined by their higher atomic weights relative to light rare earths. They are less common, and some elements within the group are facing shortages as demand outpaces supply. That typically makes them more valuable than light rare earths, though they also have smaller markets.

Dysprosium, yttrium and terbium are considered critical elements in the heavy rare earth metals group as they face low supply and increasing importance in the development of clean energy technologies. Like the light rare earths, heavy rare earths also play a critical role in other technology, including hybrid cars, fiber optics and medical devices.

Rare Earth Market Outlook 2016

A look at rare earths in 2015 and the rare earth market outlook for 2016.

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Dysprosium is used in tandem with neodymium in magnets that are vital to modern technology and renewable energy. In addition, dysprosium oxide is used in nuclear reactors to help cool fuel rods to keep reactions under control.

Terbium is used in TV screens and solid-state hard drives for data storage. Solid-state drives are heavily favored over conventional hard drives as they are faster and more reliable than conventional hard drives. Solid-state drives are now the default storage format for many laptops and personal electronics. For its part, yttrium has a variety of applications. It is used in TV screens, as an alloying agent and in the polymerization of ethylene.

The rare earth metals market

Chinese influence

The light and heavy rare earths markets are both dominated by China. In 2016, China produced the most rare earth metals at 105,000 MT. The second-largest producer was Australia with only 14,000 MT. This level of control by Chinese suppliers has made it extremely difficult for other producers to viably mine and sell rare earths. Molycorp, the owner of North America’s only rare earths operation, filed for bankruptcy in 2015 due to low rare earths prices.

High production, low labor costs and relaxed environmental regulations have allowed China to control the pricing and market viability of rare earth metals. However, in 2014, the World Trade Organization determined that China’s export practices, including duties and quotas, were in breach of regulations the country had agreed to. China is expected to set annual production volume limits on rare earths by 2020, and will clamp down on the illegal mining that has produced many of the pricing issues seen globally.

Investment landscape

Investing in rare earth metals is a challenge due to China’s market dominance. That being said, global demand for rare earths is expected to rise as the clean energy, electric vehicle and consumer electronics industries gain importance.

That said, even as regulations and demand create a more favorable environment for rare earths, investors should be specific about their research into the metals — treating the rare earths category as a single group or even as lights and heavies does not provide enough context about an element’s investment potential. Click here to learn more about the investment landscape for rare earth metals, including information on where to find prices and which companies are operating in the space.

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This is an updated version of an article originally published by the Investing News Network in 2011. 

Securities Disclosure: I, Sivansh Padhy, hold no direct investment interest in any company mentioned in this article. 

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Rare Earth Market Outlook 2016

A look at rare earths in 2015 and the rare earth market outlook for 2016.

Read the full article!

Comments
  • Dacha Strategic Metals is the best choice. An investment company with large inventory of the heavy eare earths, and no mining risk since they only hold the resource itself. And the stock has over 30% discount on NAV.

    Reply
  • As much as everyone is focusing on the lights vs. heavies, the bigger consideration is the metallurgical processing capability of the company. Anyone can mine the rare earths, but few have the metallurgical processes in place to separate the elements from one another…an expensive and time-consuming process. There is no value in unseparated rare earths. So which companies are capable of doing this separation?

    Reply
  • Dacha has limited ability to buy the rare earths, Karl. If China is not exporting them, then where will they get them from? Dacha had a great idea, but was too late to the game. The inventory they have is static, not growing.

    Reply

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