Learn Rare Earth Fundamentals

Last updated:

Rare earth investing requires understanding technical concepts that drive supply constraints, pricing dynamics, and investment risk. This section breaks down the critical frameworks investors need: element classification systems, processing bottlenecks, magnet technology, and material forms.

Essential Learning Topics

LREE vs HREE

The 17 rare earth elements divide into light (LREE) and heavy (HREE) categories based on atomic number. This distinction matters for investors because LREE and HREE have different supply chains, processing costs, and scarcity profiles.

Learn the classification →

  • Why atomic number determines category
  • LREE abundance vs HREE scarcity
  • Processing cost differences
  • Investment implications

NdFeB Magnets

Neodymium-iron-boron (NdFeB) permanent magnets are the largest demand driver for critical rare earths. Understanding magnet technology is essential for evaluating REE demand growth from EVs, wind turbines, and industrial motors.

Understand magnet technology →

  • How permanent magnets work
  • REE content by magnet grade
  • EV and wind demand forecasts
  • Substitution risks

REE Separation Process

Separating individual rare earth elements from ore concentrate is the critical supply bottleneck. This capital-intensive process determines who controls the global supply chain and creates the investment opportunity in rare earth processing companies.

Learn separation processing →

  • Solvent extraction chemistry
  • Why separation is difficult
  • Processing capacity constraints
  • Geographic concentration risk

Oxides vs Metals

Rare earth pricing quotes use different units: oxides (REO), metals, carbonates, chlorides. Understanding these forms and conversion factors is necessary for comparing prices, evaluating company revenue, and assessing value chain positioning.

Learn material forms →

  • REO pricing convention
  • Metal reduction processes
  • Conversion factors and purity
  • Application-specific forms

Why These Concepts Matter for Investors

1. Avoid Marketing Hype

Many mining companies claim "rare earth exposure" but have no processing capability, no off-take agreements, or resources dominated by low-value LREE. Understanding technical fundamentals helps you distinguish real projects from promotional vehicles.

2. Evaluate Supply Chain Risk

A mine without separation capacity must sell concentrate to China. A magnet maker without secure NdPr supply faces input cost volatility. Separation knowledge lets you assess each company's supply chain position and dependencies.

3. Understand Price Drivers

Magnet REE prices (Nd, Pr, Dy, Tb) move with EV and wind demand. Non-magnet LREE prices (La, Ce) face oversupply. LREE vs HREE classification determines which demand drivers and price catalysts apply to each investment.

4. Time Investment Entry

Rare earth pricing is cyclical. Separation capacity takes 5-10 years to build. Magnet demand growth is tied to EV adoption rates. Understanding these timelines helps you identify when supply-demand imbalances will drive price moves.

Building Your Knowledge Base

Recommended learning sequence for new REE investors:

  1. Start with elements: Review the 17 rare earth elements and their applications
  2. Learn classification: Master LREE vs HREE categories and their investment differences
  3. Understand processing: Study separation bottlenecks to identify supply constraints
  4. Analyze demand: Study magnet technology to forecast demand growth
  5. Map supply chain: Review end-to-end supply chain from mine to end product
  6. Screen companies: Evaluate equities using your technical framework

Advanced Topics

After mastering fundamentals, explore: