Rare earth elements have been a hotly traded stock since China said that it was limiting their exports last year. The move led to a number of countries digging in their back yards for whatever rare earth elements they could mine on their own. It also saw stocks of mining companies dealing in rare earths go through the roof.
Now Goldman Sachs says that the growing supply is more than the current demand of the commodities and the sector may not be the best place to invest your money. Still investors have remained bullish on the sector that includes 17 components that include yttrium, europium and dysprosium.
For the uninitiated the rare earth elements are needed to produce a number of high tech gadget components which include items like laptop batteries, catalytic convertors, wind turbine components and solar panel parts. The rare earth elements have until recently been supplied to the majority of the world by China as it covers 90% of the market for these commodities globally.
China’s decision to limit its exports was part of a measure to stem illegal mining for the rare earth elements. It has also not granted any new mining licenses for the rare earths in the last full year. Now the Chinese Ministry of Land and Resource’s decision to increased production of rare earth by 5% to 93,800 tonnes this year will ensure better supply of the commodities.