Neodymium and dysprosium may have the biggest demand growth potential among rare earths as they are used in magnets in BlackBerrys, Toyota Motor Corp's hybrid cars and windmills, industry executives said.
"The biggest growth areas for rare earth are magnets and metal alloys," Damien Krebs, metallurgy manager of Australia's Greenland Minerals and Energy Ltd., said in an interview in Hong Kong. "Their growth in future is to be around 15 to 20 percent per annum." The company plans to start production at a mine in Greenland in 2016.
Rare earths are 17 chemically similar elements, including neodymium and dysprosium. Prices of neodymium oxide, which is also used in mini hard drives in laptops and headphones in Apple's iPod, have surged four-fold to $80 a kilogram from $19.12 in 2009, according to Lynas Corp., because of rising demand and reduced supply from China.
"Currently, the most critical elements for the future are likely to be neodymium and dysprosium," Robert Mackay, president and chief executive officer of Toronto-based Stans Energy Corp., said in an e-mail in response to Bloomberg questions. "The most threatened, according to our statistics are europium, terbium, dysprosium, and yttrium. It is likely that high-powered magnets will be a rare earth leader in terms of future growth rates."
Magnets mainly use the so-called middle and heavy group of rare earths, including neodymium and dysprosium. Using iron- based magnets in a mobile phone would make it much bigger, "like a briefcase," Krebs said.
"What we are interested in are those mining companies which produce heavy rare earths, because heavy earths are used for magnetic stuff, etc., which probably have the highest growth," Stefan Steinemann, portfolio manager of REEFund, said in an interview. The Switzerland-based fund started in July and manages 20 million Swiss francs ($21 million) in mining stocks.
Surging prices are spurring companies including Sumitomo Corp. to build rare-earth plants in Kazakhstan, Australia and other countries as China, the source of more than 90 percent of the world's rare earths, in July reduced its second-half export quota by 72 percent to ensure domestic supply and cut pollution.
There will be abundant supply of rare earths by 2015 after new plants and mines are built. Still, some individual rare- earth elements, such as neodymium and dysprosium, will remain in shortage, Dudley Kingsnorth, executive director of Industrial Minerals Co. of Australia, said today. Europium and terbium will also be in deficit, he said.
"Resources of dysprosium are limited," said Yerzhan Ishanov, deputy director of general affairs at Summit Atom Rare Earth Co., Sumitomo's venture with Kazatomprom, Kazakhstan's state-owned nuclear company. "At the moment, the main supply is China."
Rare earths can also be used as catalysts in petroleum cracking, polishing materials for liquid crystal displays and glass that can prevent ultra-violet waves.