Commodities & Metals

Rare Earths Turnaround: China Could Become Net Importer in Two Years

The current slump in prices for rare earth minerals despite a Chinese curb on exports could turn around in a couple of years if the Chinese succeed in developing their own downstream industries that use the minerals to manufacture value-added products. In fact, the country could become a net importer of rare earth minerals by 2014 according to a report today from Reuters.

China has claimed that its export restrictions are an attempt to repair the environmental damage caused by mining the rare earths, but the country also hopes to become the world’s largest consumer of the minerals instead of being simply the world’s largest producer. The implications of that strategic goal are positive for US-based rare earths miners like Molycorp Inc. (NYSE: MCP), Avalon Rare Metals Inc. (NYSEMKT: AVL), and Rare Element Resources Ltd. (NYSEMKT: REE).

Molycorp’s CEO told Reuters:

When the demand is there [in China], that’s where the supply has to go. Over 80 percent of the magnets produced in the world come from China and that is growing just tremendously every year.

China is using its current control of the market for rare earths to buy time to build its manufacturing supply chain. Glass-making and polishing, once a large industry in the US, has moved almost entirely to China to take advantage of access to rare earth minerals used for coloring and polishing glass. Manufacturing of energy-saving light bulbs has also migrated to China.

Shares of US-traded rare earths miners are up about 1% today, with the exception of Avalon, and the Market Vectors Rare Earth/Strategic Metals ETF (NYSEMKT: REMX) is also up about 1%.

Paul Ausick

Is Your Money Earning the Best Possible Rate? (Sponsor)

Let’s face it: If your money is just sitting in a checking account, you’re losing value every single day. With most checking accounts offering little to no interest, the cash you worked so hard to save is gradually being eroded by inflation.

However, by moving that money into a high-yield savings account, you can put your cash to work, growing steadily with little to no effort on your part. In just a few clicks, you can set up a high-yield savings account and start earning interest immediately.

There are plenty of reputable banks and online platforms that offer competitive rates, and many of them come with zero fees and no minimum balance requirements. Click here to see if you’re earning the best possible rate on your money!

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.