The prices for the rare earths experienced a roller coaster ride. Even budding producers like Lynas have a hard time.
This article was written by Ingrid Heinritzi >> to the original article <
In April 2012, China has founded the Rare Earth Trade Association. Whether this is accompanied by a sensible price trend or possibly the monopoly position of China is even further strengthened, there is still disagreement. In any case, several mining companies have now announced that they want to promote the promotion of rare earths outside of China.
It is also important that these raw materials are sought after and necessary. The rare earth group includes 17 different metals. They are used for various electronic products, such as motors, screens, magnets, batteries and bulbs. The quasi-monopoly has China, because from there comes the vast majority of these metals. In order not to lose this role and, above all, to keep the production of key technologies in its own country, China repeatedly restricts exports.
As the German Resource Agency said in a study, there are large reserves of rare earths in Greenland (in addition to gold, platinum, uranium, lead, zinc, etc.), which could cover the global demand for 150 years. However, there is currently no mining operation there, as the climatic and logistical conditions deter mining companies. Also, the mining of rare earths and especially the splitting into suitable raw products extremely pollutes the environment. This is also another reason why China's rare earth production is being cut back.
But rare earth deposits are found sufficiently on our planet. For example, Molycorp Minerals is again producing rare earths in the United States. However, lower prices and higher production costs brought 2012 a loss in the third quarter. That's why CEO Mark Smith has left Molycorp after four years. But the company did not say anything about the reasons.
Another company that is currently making headlines is the Australian Lynas, whose shares are on a downtrend. Problem is the controversy with the government of Malaysia, which urges that Lynas exports the radioactive residues of production. Lynas wants to bring the raw material extracted from his mine in Western Australia to Malaysia in order to separate the individual rare earths there. However, in retrospect Malaysia may not have been the right choice for the processing site of the mined rare earths. The fear of residents and environmentalists of radioactive contamination can take on dimensions anywhere that can be fatal to a mining company.
Whether investing in rare earths is a difficult question. According to Roland Berger experts, prices for the heavy rare earths will rise, while the light rare earths are more likely to see prices fall. A bottleneck is expected mainly in the heavy rare earths.
Risks should definitely be spread. Investing in individual companies, as you can see very clearly at Lynas, is difficult. Therefore, certificates based on several titles are ideal. One example is the Open End Basket Certificate on the Commerzbank Seltene Erden Index Basket (ISIN: DE000CZ33EA1). The basket is made up of around 15 companies from the rare earth sector. Molycorp, Stans Energy and Lynas have high weightings in the basket. A China Rare Earth and a Greenland Minerals & Energy are also included.
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