When the rare earth castle came crashing down

New York

IN late 2010, two questions were on the minds of many commodities investors: What are rare earths? And where could they buy some?

The group of 17 obscure, difficult-to-pronounce minerals, used in hot-ticket items like smartphones, electric cars and wind turbines, were beginning to post the kind of price gains not seen even in the traditionally volatile energy and metals markets.

For many investors, the only way to get in on the action was to buy shares of US producer Molycorp Inc. Its market capitalisation had shot up to US$4 billion after an initial public offering earlier that year.

On Thursday, Molycorp filed for bankruptcy protection, having run out of cash after a precipitous and sustained slide in rare-earth prices. The company has become a cautionary tale for investors…