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Neodymium, time to recycle?

Over the years I've written a number of columns on the subject of rare-earth metals and, in particular, neodymium.

In each of those columns I've suggested that folk invest in neodymium futures if they want to make some long-term returns -- and I've been right.

If you were wise enough to make such an investment then you'll be chuffed to bits to learn that the largest producer of rare-earth metals in China has halted production, with the intention of driving up prices.

Your futures are now looking even rosier.

Why are neodymium and its close neighbours on the periodic table so important to us in the 21st century?

Simply because they make such very good super-magnets and those magnets are becoming critical to the small-scale generation of electricity and its use in a growing range of applications.

This move by China probably comes as something of a relief to futures-holders, because the decline in the global economy has seen prices start to fall of late -- thus prompting the production halt just announced.

From this point forwards however, prices should continue to climb -- although if the pressure comes off the supply and environmental impacts of fossil fuels, the future rate of price increases may not match those previously seen.

While it's true that rare-earth metals are found elsewhere in the world, the cost of mining them tends to be much higher -- driven partly by labour costs and partly by the general resistance to the type of mining activities associated with digging up large amounts of material to extract a relatively small amount of the target ore.

Even if countries such as Canada, the USA and Australia were to ramp up their mining and production of these elements, the price would continue to rise, simply because there is no way they can compete with the very low cost of Chinese sources.

Given that these materials are increasingly found in many of the electrical and electronic items we regularly buy, use then throw away, I'm also expecting that dumpster-mining for them will become a viable option in the very near future.

Next time you see a pile of junked appliances and electronics, you may be looking at a fairly useful sum of money that could be earned from extracting the components containing high levels of these rare-earth metals. Small electric motors, hard-drive head-positioning magnets, optical elements, etc -- they might all have amounts worth recovering and selling.

Remember -- whenever the word "rare" is involved, there's a price premium. Buy-up now, while stocks last :-)

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