When a Blackberry vibrates to alert its owner of a new message or call, it can only do so because of a rare earth metal. The magnet that makes it vibrate is made of Neodymium, one of 17 rare earth metals which are increasingly being sought by mining companies around the world as global demand grows unabated.

Even though the value of the 'rare earth' sector is small, it is increasing fast: it was worth $500m in 2003, according to an Ernst & Young 2010 report, and was estimated to be worth $2bn last year.

It is estimated that some $1000bn-worth of business relies directly on rare earth metals. Much of that business uses high-tech miniaturisation for technology, such as Blackberries and computers, and it is also used by the military.

Hard to reach

The name ‘rare earth’ is misleading. These metals are not rare per se, but they are inaccessible and often found as cocktails of metals rather than on their own, so mining is expensive and complicated. China dominates supply with a staggering 97% because rare earth metals that are relatively cheap to access are found mainly within its borders.

But no one wants to rely on a Chinese supply line – particularly since last year’s massive price increases were caused by China capping its export quota. Some rare earth metal prices rose by as much as 700% as a result.

The price of cerium, which is used in flat-screen televisions, increased from $4 per kilogram to $36 per kilogram between April and October 2010. So serious was the problem that the European Commission issued a report warning EU countries that they should be doing more to be involved in these raw materials, which are critical to so many European industries.

Search for alternatives

So the world’s energy and mining companies are searching far and wide for alternatives. There are explorations in the US, Australia, South Africa, Greenland and Turkey. Canada-based Stans Energy Corporation has invested in mining property in Kyrgyzstan, known as Kutessay-II. The mine, and the processing plant attached to it, used to be run by the former Soviet Union. It was shut down when the USSR collapsed – at that time there was no strong demand for rare earth metals (demand did not pick up until the mid-1990s).

Because it used to be a working mine, Kutessay-II is considered tried and tested in rare earth industry circles. Stans Energy chief executive Robert Mackay tells fDi Magazine: “What is particularly attractive for our potential buyers and investors is what we call a known metallurgy. There is a processing plant there already and it [the former Soviet Union] has done the science which, with these metals, can be very, very complex.”

Korean involvement

Now the South Korean government wants to get involved in Kyrgyzstan. It has discussed potential involvement with Stans Energy. Mr Mackay says: “We’ve talked to them about it, but there is no deal yet.”

This type of mining is very complex, very expensive and very long term. But the rewards could be well worth the wait; as Mr Mackay says: “If it doesn’t grow, it’s mined."