Rare earths. The name is really a misnomer.
A highly regarded former geologist and then stockbroker once told me that “rare earths are like belly buttons; just about every Australian mine has some. It really comes down to what rare earths they have and how much is commercial.”
Although rare earth elements (REEs) are referred to as rare they are a relatively abundant group of 17 elements. Cerium is the 25th most abundant crustal element and lutetium, the scarcest REE is about the 60th most abundant.
However, it is not common for them to occur in concentrations sufficient to support commercial mining operations.
While they may not be that rare, REEs are considered by some to be amongst the most important ingredients in the global race to reach net-zero emissions by 2050.
In fact, they are named near the top on most nations and regions Critical Minerals lists.
The U.S., in particular, has made the search for and subsequent exploitation of REEs a major focus since President Joe Biden was elected.
‘National security’
Shortly after coming into office, President Biden named REEs near the top of his list in the White House’s 100-day review of supply-chain vulnerabilities.
That review identified the critical need for securing a supply of rare-earth permanent magnets, while it also confirmed China’s dominance in the REE field. A further review has been called for to establish whether a U.S. dependence on China for the supply of rare-earth permanent magnets represents a threat to national security that would warrant the imposition of tariffs.
The study found that two-thirds of U.S. defence demand is for direct rare-earth permanent magnets, which are then used by U.S. manufacturers.
“[The] Department of Defense’s import posture affords it marginally greater visibility into its foreign reliance compared to other essential civilian sectors, who may not even realize their exposure to an NdFeB (rare earth) magnet disruption since it is several tiers removed from the products they purchase from foreign sources,” the report says.
Major uses
The U.S. study has identified which industries are using rare-earth elements, either purchased directly or “embedded” in other inputs. It estimates that the U.S. private sector uses REEs worth US$613M as essential inputs to total manufacturing activity worth US$496B.
For example, spending on rare-earth magnets by manufacturers of computer storage devices is US$78M, medical and therapeutic devices – US$39M, air and gas compressors – US$24M, and phones – US$38M.
Magnets are by far the largest use of rare-earth minerals by value globally. Other major uses for REEs include as catalysts for oil refining and petrochemicals, pigments for dyes and paints, pure glass for optical instruments, ceramics for turbines, and electronic components and phosphors for lighting and screens
It is not only the Biden Presidency that identified the strategic importance of REEs. Notably they were a significant inclusion in the U.S. government’s 2018 list of 35 critical minerals. This list was an initial step toward ensuring reliable and secure supplies of minerals critical to the U.S. economy and military.
The U.S. Geological Survey (USGS) says REEs are an essential part of many high-tech devices.
“REEs are necessary components of more than 200 products across a wide range of applications, especially high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions,” a USGS report notes.
“Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems. Although the amount of REEs used in a product may not be a significant part of that product by weight, value, or volume, the REEs can be necessary for the device to function.
“For example, magnets made of REEs often represent only a small fraction of the total weight, but without them, the spindle motors and voice coils of desktops and laptops would not be possible.”
The downstream demand for REEs is divided into five major sectors: permanent magnet materials, catalytic materials, luminescent materials, polishing materials, and hydrogen storage materials.
With the rapid development of global high-tech industries, REEs are being applied to more high-tech fields and the consumption of rare-earth new materials is growing rapidly. The new energy vehicle industry, the wind power industry, and other consumers of REEs all have a promising future, which promotes the development of the REE industry.
Market moves
The ongoing tensions between the U.S. and China are currently putting the spotlight on rare earths. Since China is the world’s largest producer of the materials by far, the fraught relationship between the two countries is directing attention to supply chain issues in the REE industry.
However, a study by Dublin-based firm Research And Markets has found that while China’s REE dominance in the global market still exists, its dominant advantage is gradually weakening. With the increase in local mining efforts in the U.S., Japan, Australia and other countries, China’s REE production has fallen from 81.4% in 2016 to 58.3% in 2020.
According to the firm’s analysis, in the 1990s, Chinese enterprises started mining and exporting REEs on a large scale, and were driven by low mining costs and low environmental protection costs.
The USGS asserts that in 1993, 38% of world production of REEs was in China, 33% was in the U.S., 12% was in Australia, and 5% each was in Malaysia and India. Several other countries, including Brazil, Canada, South Africa, Sri Lanka, and Thailand, made up the remainder.
However, in 2008, China accounted for more than 90% of world production of REEs, and by 2011, China accounted for 97% of world production. Beginning in 1990 and beyond, supplies of REEs became an issue as the government of China began to change the amount of the REEs that it allows to be produced and exported. The Chinese government also began to limit the number of Chinese and Sino-foreign joint-venture companies that could export REEs from the country.
In the past decade, China’s REE reserves have fallen sharply. Its proportion in the global REE reserves once exceeded 70% while at the end of 2020, the proportion was only 38%, according to Research And Markets. From 1998 to 2015, the Chinese government introduced an export quota licensing system for REEs.
At present, the annual production capacity of REE separation enterprises in China is about 400,000 tonnes, and the global annual demand is about 200,000 tonnes. The international market demand is about 90,000-100,000 tonnes, and the domestic market demand is about 100,000 tonnes.
Earlier this year, Research And Markets published another report titled “Global Rare-Earth Metals Market by Type (Lanthanum, Cerium, Neodymium, Praseodymium, Samarium, Europium, Others), Application (Permanent Magnets, Metals Alloys, Polishing, Additives, Catalysts, Phosphors), and Region – to 2026”.
This study estimated the global rare-earth metals market will grow from US$5.3B in 2021 to US$9.6B by 2026, at a CAGR of 12.33% during the forecast period.
