Securing future supplies of critical minerals, including rare earth elements, has become increasingly important for nations globally due to the use of these natural resources in military technology, clean energy, and consumer electronics.
For investors, it also provides an opportunity for outsized returns.
There are 17 minerals classified as rare earth elements (REEs): 15 lanthanides, plus scandium (Sc) and yttrium (Y).
Despite its name, rare earths are relatively abundant in the Earth’s crust, but to find enough concentrated in an economically viable deposit is difficult.
The most critical from a military perspective are the Heavy Rare Earth Elements (HREEs), such as Dysprosium (Dy) and Terbium (Tb), and Light Rare Earth elements, including Neodymium (Nd) and Praseodymium (Pr), which have magnetic attributes and are critical components in the production of high-performance permanent magnets.
Neodymium-based (Nd) permanent magnets are lighter and stronger than other types of magnets and can be engineered into any shape or size.
Adding Dy and Tb into Nd magnets allows operation at higher temperatures, enhancing performance.
Military uses include precision-guided missiles, radar systems, and fighter jets. A single F-35 aircraft is estimated to require about 418 kilograms of REEs.
HREEs have a market value 5 to 10 times higher than light rare earths, due to their limited availability and strategic importance.
The US Geological Service (USGS) estimates that China hosts 44 million tonnes (Mt) of REE, while Vietnam has 22Mt, and Brazil hosts 21Mt, just to name the top few.
The US, meanwhile, has just 1.8Mt in the ground.
REEs can also be classified as critical minerals. Other critical minerals include lithium, copper, nickel, graphite, and antimony.
There are more than 100 antimony minerals, but stibnite is the most important.
Antimony oxide is used mainly as a flame retardant in plastic, fabrics and other materials.
More than 70% of the world’s annual antimony needs are supplied by China and Russia.
Tungsten has also been classified as a critical mineral, with its use as a hardening agent for the tips of missiles and other munitions to give penetration, as well as providing penetration resistance in armor.
Tungsten is also used as a nanofilament in semiconductors for artificial intelligence (AI) applications.
In 2024, 81% of the world’s tungsten was produced by China.
With China producing the vast majority of the world’s REEs and having global dominance in some critical minerals, the U.S. and its allies have become increasingly vulnerable.
This has prompted the U.S. to make investments in domestic and friendly country suppliers and project developers of these critical minerals, which should provide money-making opportunities for retail investors in the years ahead.
