The rapid evolution of speculative investment in the REE market before, during, and after the rare earth crisis of 2010–2012

Abstract

The purpose of this study is to examine the rate of investment capital that flowed into the rare earth element (REE) junior mining market, to assess the key factors that affected this investment rate, before, during and after the Rare Earth Crisis of 2010–2012, and to determine the result of the total capital invested. The time period chosen for the study was 2006–2015. From the approximately 400 junior mining companies that were pursuing REE during this time period, 28 companies were chosen to represent the market for this study. During the time period, these 28 companies raised a total of $5,924,554,171, with $4,254,272,520 of this amount being raised during the Crisis time period of 2010–2012. Critical factors that affected money flowing into the rare earth junior mining companies were newsletter articles, media coverage, Chinese rare earth policies, government announcements and reports, the initial public offering of Molycorp, Inc., rare earth element prices, World Trade Organization decisions, and junior mining company stock prices. Of the 28 companies, only Lynas Corporation Ltd. and Molycorp, Inc. achieved commercial REE production. Capital flowing into REE junior mining companies declined rapidly from 2013 to 2015, as the market found other solutions and the Crisis subsided.