Rare earths, also known as rare earth metals, are the most sought-after and therefore the most important raw materials in the world. Nevertheless, they are not traded on the commodity exchanges.
Also, rare earths are actually not as rare as their name suggests. Their extraction entails major environmental problems and yet they are indispensable for high-tech products and are also an interesting investment.
What are rare earths?
The term rare earths covers 17 metals, all of which are relatively soft and have a silvery color. They are mainly found in the minerals monazite and bastnäsite. They were first found in the 18th century and have become increasingly important since then.
Rare earths are not rare
Although the name suggests it, most rare earth metals are not rare at all. In fact, there are larger deposits of many rare earths than of lead, for example. Even the rarest metal in the rare earths group, thulium, is more abundant than gold.
Extraction not without environmental problems
Rare earths are found in large quantities in various countries around the world. The main producing country is China, followed by Brazil. But the extraction of these precious raw materials entails major environmental problems. Acids are used to extract the soft metals from the ore. This process produces a highly toxic sludge containing various toxins, including radioactive materials such as uranium and thorium.
Especially in China, the largest producer country, there are virtually no environmental regulations for mining rare earths, so that the groundwater and thus also the health of the people are at risk. China already has huge wastewater lakes, which are increasingly becoming an ecological and health hazard.
Irreplaceable for many technologies
Nevertheless, rare earths are irreplaceable for many technologies. Experts believe that rare earths will soon overtake oil in terms of importance.
Rare earths are needed in almost all high technologies, from the manufacture of cell phones, computers, monitors, hybrid cars and solar panels to technologies for space travel, satellites, radar systems and weapons.
Of great interest to the financial industry
It is therefore no wonder that rare earths are an extremely interesting investment topic for the financial industry and that more and more investors are looking to expand their portfolios by investing in rare earths.
In the case of various rare earth metals, investors can invest directly in their oxides. The storage of the oxides is mostly done directly at the metal traders who offer the rare earth metals for sale.
Much simpler and, above all, much less risky for the investor is the investment in shares, funds, index funds ETFs or certificates.