BlackBerrys made by Research In Motion Ltd. (RIM) of Waterloo, Ontario; Cupertino, California-based Apple Inc. (AAPL)’s iPods; General Motors Co. (GM) of Detroit’s plug-in Volt; and Toyota City, Japan- based Toyota’s Prius all use rare-earth metals.
While rare-earth materials are relatively abundant in the earth’s crust, finding deposits large enough to mine is less common, the U.S. Geological Survey said. Global demand for the elements may more than double by 2020 from 125,000 metric tons last year, according to Molycorp’s filing last month with the Securities and Exchange Commission.
Rare-earth metals are expensive for producers to extract and are often laced with radioactive elements. China has come to dominate the market because it has been able to produce the metals more cheaply and with fewer environmental restrictions than its competitors.
Prices for rare-earth metals and shares of the companies that produce them have jumped since China said on July 8 that it would reduce export quotas for the second half of 2010 by 72 percent as it attempts to meet domestic needs while closing polluting and inefficient mines.
‘Light’ Versus ‘Heavy’
Prices of many “light” rare-earth elements, including lanthanum and cerium, rose 600 percent to 700 percent on average last year, Matt Gowing, a Toronto-based analyst at Mackie Research Capital Corp., said in a report to clients dated Feb. 8. The price of dysprosium, a “heavy” rare-earth element used in magnets for car motors, almost tripled to $305 a kilogram.
The Bloomberg Rare Earth Mineral Resources Index of 14 companies has surged 273 percent since July 8, seven times more than the 39 percent gain for the MSCI World Materials Index of 161 commodities producers over the same period.
Molycorp, which was formed in 2008, has climbed 252 percent since raising $394 million in its July 29 IPO to start its mine near Mountain Pass, California. The Standard & Poor’s 500 Index has advanced 19 percent in the same period, Bloomberg data show.
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