Rare earth elements are critical for the production of many electronic devices that are used daily by billions of people around the world. The largest known source of rare earth elements are found in China. However, the search is on in many emerging markets for alternative resources. Investing in rare earths can provide your portfolio with an extra element of emerging market exposure.
Rare earth elements, which are also referred to as rare earth metals, are a set of seventeen chemical elements in the periodic table. The seventeen include yttrium and the 15 lanthanide elements (lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, and lutetium). The seventeenth is Scandium. Scandium is often found along with the other rare earth elements and is sometimes classified as a rare earth element. The similar properties of these elements cause them to usually be found clustered together.
Over the past two decades, there has been a rapid increase in demand for many items that require rare earth metals. Rare earth elements are used in many common products including computer memory, DVDs, rechargeable batteries, cell phones, car catalytic converters, magnets, and fluorescent lighting among others.
A good example of this increased demand for rare earths is in cell phones. While twenty years ago not many people had a cell phone, today it is estimated that there are 5 billion in use worldwide. As the world’ population grows and becomes increasingly wealthy, that number is expected to grow.
Source: NASDAQ