An already buoyant rare earths market gained further momentum in late February when the U.S. government announced new moves to tie up domestic supplies of critical minerals.
With concerns of shortfalls in rare earth supplies, in a market currently dominated by China, the White House is outlaying billions to ensure private and defence users have access to a strong domestic supply chain.
In announcing that the government was upgrading its investment aimed at “Securing a Made in America Supply Chain for Critical Minerals”, the Biden-Harris administration declared that critical minerals provide the building blocks for many modern technologies and are essential to our national security and economic prosperity.
“These minerals – such as rare earth elements, lithium, and cobalt – can be found in products from computers to household appliances. They are also key inputs in clean energy technologies like batteries, electric vehicles, wind turbines, and solar panels,” the White House stated.
“As the world transitions to a clean energy economy, global demand for these critical minerals is set to skyrocket by 400 to 600% over the next several decades and, for minerals such as lithium and graphite used in electric vehicle (EV) batteries, demand will increase by even more – as much as 4,000%.
“The U.S. is increasingly dependent on foreign sources for many of the processed versions of these minerals. Globally, China controls most of the market for processing and refining for cobalt, lithium, rare earths, and other critical minerals.”
Strong investment
The new push to develop a strong local market follows last year’s release of a first-of-its-kind supply chain assessment which found the U.S.’s over-reliance on foreign sources and adversarial nations for critical minerals materials, which the White House suggested posed national and economic security threats.
“In addition to working with partners and allies to diversify sustainable sources, the reports recommended expanding domestic mining, production, processing, and recycling of critical minerals and materials – all with a laser focus on boosting strong labor, environmental and environmental justice, community engagement, and tribal consultation standards,” the White House declared in February.
The White House also revealed that President Biden had met with administration and state partners, industry executives, community representatives, labour leaders, and California governor, Gavin Newsom, to announce major investments in domestic production of key rare earths, critical minerals, and materials.
Following those meetings President Biden announced that:
The US Department of Defence’s Industrial Base Analysis and Sustainment programme has awarded MP Materials US$35M to separate and process heavy rare earth elements at its facility in Mountain Pass, California, establishing a full end-to-end domestic permanent magnet supply chain. Paired with this catalytic public funding announcement, MP Materials will announce it will invest another US$700M and create more than 350 jobs in the magnet supply chain by 2024. Currently, China controls 87% of the global permanent magnet market, which are used in EV motors, defence systems, electronics, and wind turbines.
Secretary Granholm also unveiled DOE’s first-of-its-kind US$140M demonstration project funded by the Bipartisan Infrastructure Law (BIL) to recover rare earth elements and critical minerals from coal ash and other mine waste, reducing the need for new mining. This project will deliver on the work of the Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization by creating well-paying manufacturing jobs in legacy coal communities.
She also confirmed US$3B in Bipartisan Infrastructure Law (BIL) funding to invest in refining battery materials such as lithium, cobalt, nickel, graphite, and battery recycling facilities, creating good-paying clean energy manufacturing jobs.
Meanwhile, private firm MP Materials recently announced construction of a rare earth metal, alloy and magnet manufacturing facility in Texas and a long-term supply agreement with General Motors to power the motors in more than a dozen of GM’s EV models.
Production will begin next year, with capacity to produce enough magnets to power 500,000 EV motors annually.
The White House also revealed that the U.S. government has moved to update “outdated mining laws and regulations” to assist industry in building the new domestic supply chain.
With the 150-year-old Mining Law of 1872 still governing the mining of most critical minerals, the US Department of Interior (DOI) has recently established an Interagency Working Group (IWG) that will lead an administration effort on legislative and regulatory reform of mine permitting and oversight.
The IWG released a list of Biden-Harris administration fundamental principles for mining reform to promote responsible mining under strong social, environmental, and labour standards that avoids the historic injustice that too many mining operations have left behind.
The IWG will deliver recommendations to Congress by November 2022. It will also host extensive public input and comment sessions to ensure an inclusive process and will work with the relevant agencies to initiate updates to mining regulations by the end of the calendar year.
Rising prices
While the White House was revealing its new game plan to support its domestic rare earths and critical minerals sectors, leading global resource industry research firm Wood Mackenzie was reporting that rare earth prices are on this rise.
In its report a “Global rare earths short-term outlook February 2022” Wood Mackenzie noted that February had seen a sustained rise of rare earth prices for key magnet elements, with production at rare earth metal facilities in China continuing operations despite the lunar holiday season.
“Tight material availability remains within the Chinese spot market, with processors preferentially directing product to long-term contracts. The release of increased production quotas in China has had limited influence on prices, with refined production capacity unable to ramp-up production of refined products in the short term.
“Further capacity build-out in both China and the rest of the world is required to keep pace with demand growth in magnet applications, forecast to support prices during the coming years,” the report says.
Wood Mackenzie had also noted that the closure of the Myanmar-China border in December had further exacerbated feed stock concerns for heavy rare earths with limited alternatives available and inventories already at low levels. Continued strong growth in magnet demand has been supported by further growth in EV vehicle sales though wind turbine technologies have increase above expectations. Overall rare earth demand growth is expected to exceed 5% in 2022, though demand from magnet applications is forecast to increase at a significantly higher rate. Conversely, non-magnet applications will display subdued or negative growth in the short-term outlook.
“The rare earths sector, particularly the rare earth magnet metals (such as neodymium (Nd)), had a great 2021; but given that the electric vehicle (EV) and clean energy booms are just getting started, 2022 should be another strong year. The most powerful electric motor magnets used today are known as permanent magnets, and they typically are made of neodymium iron boron (NdFeB). Dysprosium (Dy) and praseodymium (Pr) are also commonly used in permanent magnets,” the report notes.
Mordor Intelligence has also forecast strong rare metals market growth. It recently reported that the global rare earth elements market is estimated to be at 161,354.65 tonnes in 2022 and is expected to register a CAGR of more than 4% during 2022-2027. According to Mordor, the factors driving the growth of the market studied are the high demand from emerging economies and dependency of “green technology” on rare earth elements.
It also reported that the Asia-Pacific region is dominating the global market, owing to the increasing production of rare earth metals and rising demand from industries, such as consumer electronics.
