why rare
Our Methodology
The commodities in our portfolio are used across the infrastructure, technology, space, renewable energy, and agriculture sectors. Many of them have unique characteristics that make them rare.
We have developed our own methodology of qualitative and quantitative indicators to assess which commodities we define as rare. In our classification, ‘rare’ does not exclusively refer to a commodity being available in limited amounts. It may also refer to limited substitutes, high complexity in production or high market power of one or few companies or countries.
A high degree of customisation, purity or specific grades may also make a certain specification of a commodity rare.
Qualitative Indicators
Many of our commodities find their application in highly specialised industries. This ranges from the production of permanent magnets used in renewable energy creation to high-tech applications in satellites or quantum computing.
Rare Commodities have unique physical and chemical properties that limit the number of substitutes available to replace their specific industry applications. This limitation highlights the long-term demand for these Rare Commodities.
Our portfolio includes many commodities that require strong technical knowledge and expertise to extract, produce and store. Often many of our commodities follow multiple stages of production and require capital-intensive facilities which involves a high level of technical expertise.
When important information about a commodity is difficult to obtain, or is only known to a few market participants, it can indicate that the commodity is rare.
Quantitative Indicators
Unlike mainstream commodities, Rare Commodities often find their applications only in limited quantities. Hence, the global trade volume may be low even when the commodity shows a high global trade value.
Global Trade Value is the Dollar amount of the imports/exports of the commodities. Rare Commodities often have a noticeably low trade value. A high degree of customisation, different grades or purity may require a separate evaluation.
Production Compounded Annual Growth Rate (CAGR) can give an indication of the speed at which output can be increased over the short or medium term. For many Rare Commodities, even when a noticeable increase in demand occurs, a corresponding increase in production can be a time-consuming process due to complexity factors or scarcity in occurrence.
Market concentration refers to the degree of competition in the market for a particular commodity. Supply of Rare Commodities is often dominated by one or a few companies or countries. High barriers of entry in Rare Commodity markets often imply concentration does not noticeably decrease over the short or medium term.
