Market Update 30th March 2026

Rare Earths

Commodities are currently coming to the centre of investment portfolios. Whether it’s oil shocks coming from the Middle East to gold being challenged as a safe haven asset. All commodities across the spectrum are having a light shone on them. Rare earths in particular due to their unique characteristics and supply limitations.

There are 17 rare earth metals which share magnetic, luminescent and conductive properties. They are used across many different industries and are integral to all aspects of modern society. Metals such as neodymium and praseodymium are used to make high strength magnetics used in wind to increase wind turbines efficiency, but also in computer parts like loudspeakers and microphones due to their lightweight properties.

In general, all rare earths are used across many industries. They are used in EVs for motor efficiency, this enables higher vehicle speeds and longer driving distances. Other industries include aerospace and defence systems, such as radar and jet engines, to data centres which are very topical at the moment. Also, a key sector they are used in is healthcare as they are used in medical equipment like MRI machines, but a more integral part of society is their use in personal electronics like smartphones.

This vast usage is helpful for demand which has been high, despite this prices have been low. In fact, mines in China typically discard up to 50% of the rare earths they mine due to low prices, mining the extra materials isn’t worth it. Therefore, supply has been limited and will likely remain that way for the next few decades. And with the demand quickly becoming hot topics for a number of industries, prices may begin to rise.

The term rare earths is actually quite misleading, they are not rare. They are found all over the world but are “rare” as it’s unusual to find them in pure form or in large quantities. This makes mining and refining difficult and specialist and comes at huge environmental costs. If found in large concentrations it can be radioactive and therefore to mine safely is difficult.

The mining and refining of these metals is dominated by China, which has 30% of the world’s rare earths discovered so far. The country currently processes nearly 90% of global rare earths and is about 70% of global supply. China has become the dominant player not just because they are willing to take the environmental costs of mining these metals. But the country has become a global specialist with infrastructure and expertise to mine and process the metals. Although it’s believed that other countries are increasing their mining and production of these metals, such as the US, China will remain dominant in this space for decades.

This is particularly important as last year China implemented its most restrictive legislation of these metals to date. The new rules meant licences are required for overseas entities to export or re-export rare earth items to or between countries outside of China if the item originated in China. This can cause delays, cost increases, and potential refusals. As the same with all other commodities, they are highly political.

The US and Australia are the world’s second and third largest producers, accounting for around 13% and 7% of global supply. Something which particularly the US is looking into is using waste from gold and silver mines across North America for rare earth supply. It will not bridge the entire gap of China’s supply, but it does have positive environmental benefits for mining companies by creating a more circular economy and using all aspects of the materials mined.

Commodities are an area we have been looking at for a while, including transition metals as well, and it’s a sector which we find exciting for investing. There has been a lot of focus on gold and silver in the last year or so but now focus could be shifting.

Emily Cave – Research Analyst

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