One of the areas of small cap investing that has been highlighted on the Canadian penny stocks blog has been rare earth elements. There are many exploration and development companies that are traded on the Toronto Venture Exchange and looking for deposits of rare earth elements for various industrial uses. But often times the term “rare earth element” gets used with no specific elements listed. Here is one.

Tantalum – This element is found in our everyday lives and has several uses because of its characteristics. It has a very high melting point 3000 C and is highly resistant to corrosion. Most importantly is that it can very effectively store and release electrical charge.

As a result of these characteristics tantalum is often used in capacitors in consumer electronics. Because of its efficiency of storing and releasing electricity it does not have to be very big and allows for smaller form factors of the overall design of the device.

Tantalum is not traded publicly as a commodity. The price is negotiated between supplier and purchaser. As a result of this method significant pricing power is left in the hands of the supplier. What’s more is that the demand for this rare earth element is growing by 8% – 12% per year for the past 15 years.

Currently Australia has the largest producing tantalum mine. Canada, Brazil, and central Africa all have discovered tantalum deposits that are capable of being mined. The African countries are still at political risk and haven’t been greatly explored to this point.

Mines located in Canada are at an excellent position to be mined. One of the companies positioned in this market is Commerce Resources (CCE.V). They have two projects currently underway; the Blue River project in British Columbia and the Eldor project in Quebec.

The share price is currently around the $0.40 mark but has seen prices as high as $0.80 in October of last year. This post won’t speculate any further on the direction of the share price but leave that to your due diligence as always.

photo credit: Vishay Intertechnology

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