Shares of junior Canadian miners with rare earth prospects gained sharply Wednesday as manufacturers and investors eyed alternative producers of the minerals after main supplier China slashed export quotas.
China accounts for 97 per cent of the world's production of rare earths, minerals crucial to producing high-tech goods such as smart phones, electric cars and wind turbines.
While deposits exist in Australia, the United States and Canada, exploration and production lags China significantly.
The market gap opened by China's export curbs will likely be filled first by developing mines like Molycorp's Mountain Pass in California and Lynas's Mount Weld in Australia.
But those deposits are skewed toward "light" rare earths such as cerium and lanthanum, while "heavy" elements such as dysprosium, terbium and europium are more in focus in Canada.
Shares of junior miner Avalon Rare Metals , which is developing its Nechalacho project in the Northwest Territories, jumped 40 per cent on the Toronto Stock Exchange to $6.40 by midmorning.
Vancouver-based Rare Element Resources Ltd. , which owns rare earth properties in the United States, was also 40 per cent higher, at $14.54, on the TSX Venture Exchange.
Great Western Minerals, Avalon and Stans Energy are all clamouring to bring heavy rare earth projects on line, with production projected for 2013 and beyond.
Another Canadian company, Dacha Strategic Metals , said it had paid $3.5-million for 12,000 kg of dysprosium. Its shares were 9 per cent higher.
There are at least 26 publicly traded companies in Canada that have rare earth projects at some stage of development. But good quality, economically feasible deposits are scarce.
Despite the name, the rare earths are a relatively abundant group of 17 chemical elements. They were originally described as rare because they were unknown in their elemental form and difficult to extract from the rocks that contained them.