A new exchange-traded fund (ETF) covering rare earth metals, many of which are crucial for the development of clean technologies such as solar panels, attracted widespread investor interest in its first day of trading last week.
The Rare Earth/Strategic Metals ETF was launched by money management company Van Eck, and began trading on the New York Stock Exchange as REMX.
An ETF tracks a range of stocks, but can be traded as a single stock on its own. The rare earth ETF is designed to follow the Market Vectors Rare Earth/Strategic Metals Index, which is owned by 4asset-management GmbH.
Rare earth metals have attracted significant attention in the past few months as concerns have grown that certain materials could face serious shortages over the coming years.
These industrial metals can be difficult to extract in commercially viable quantities. They are used by a variety of industries, but are particularly important to electronics firms and the clean tech sector, which uses a number of rare earth metals in wind turbines, solar panels and electric vehicles.
China has featured heavily in coverage of rare earth minerals in recent months, because the country currently controls around 97 per cent of rare earth production.
However, China is only the fourth most represented country in the index, with 14.84 per cent of the net assets. Australia is the most heavily represented, with 23.9 per cent of the assets, followed by Canada and the US.
1.6 million shares were traded in REMX during its first day on Friday, making it 72nd out of 1103 ETFs as listed on Yahoo's ETF centre by volume. It finished up 2.4 per cent up on the day, at $20.67.
In related news, Chinese vice minister of commerce, Chen Jian, today attempted to appease fears that China was looking to cut back the supply of rare earth metals, telling reporters that export quotas for next year will not be cut significantly from current levels.
In the past year China has cut back export levels of rare metals by around 40 per cent compared to 2009, sparking fears that some sectors could face crippling shortages.
However, Chen defended China's position, insisting that the export quotas were necessary to guard against over exploitation.
"China's rare earth industry is full of problems: excessive exploitation, rampant smuggling and serious environmental pollution," he said. "Don't you think the Chinese government has to step in and enhance management?"
The latest news came as Japan signed a wide-ranging deal with Vietnam that will see the two nations co-operate to mine rare earth metals from the South East Asian country.