Rare Earth Elements Market

Global Industry Analysis (2017 - 2020) - Growth Trends and Market Forecast (2021 - 2025)

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Industry: Metals & Mining | Author Name: Harshad

Rare earth elements (REE) also known as rare earth metals (REM) are a set of lanthanide elements along with yttrium and scandium. Over the last couple of decades, the world production of rare earth elements (REE) have ramped up drastically; with high-tech industries and clean technology being in the spotlight. On the basis of atomic weights rare earth elements are classified as light rare earth elements (LREE) and heavy rare earth elements (HREE). Heavy rare earth elements are more valuable compared to light rare earth elements and also have niche markets.

Global production of rare earth elements stood at 190 Kilo Tons in the year 2018 with China being the major producer. China accounted for more than 75% of the global REE output in the year 2018. Furthermore, China virtually has complete control over the production of high rare earth elements. However, illegal extraction and mining in China remains a major challenge with government determination to curb the problem. The U.S, Australia and Myanmar are other key producing countries in the rare earth element market.

Rare earth elements are used in wide range of applications, ranging from magnets to ceramics. Magnets accounted for more than 30% of the total demand owing to rise in demand from electronic gadgets and technologies. Permanent magnets as used in synchronous motors, a major component in wind turbines and electric/hybrid vehicles. Permanent magnets are also used in defense sector. Rare earth elements have another key application as catalysts: in petroleum refining industry/vehicle exhaust catalytic converters. Lean NOx Trap (LNT) technology uses Cerium as a major catalyst to control the emissions. Cerium and Lanthanum are the key REE used to stabilize chemistry and structure of zeolites used in crude oil refining. Few of the significant application of rare earth elements include metallurgy & alloys, glass polishing powders & additives, phosphors, pigments, ceramics& glazes, and battery alloys.

Asia Pacific region continues to be largest consumer of rare earth elements. Countries such as China, Japan and South Korea have very strong downstream integrated capacities to convert REE into value added products such as magnets, catalysts, alloys and metals. North America and Europe are the major import destinations, relying mostly on China to meet its growing demand for REE into the foreseeable future. There are upcoming mining projects in Australia and Canada; however, they will not be able to compete with China’s monopoly in the REE market.

Clean Energy Technologies Stealing the Limelight

Clean energy technologies such as electric vehicles and wind power generation are expected to drive the demand for rare earth elements over the foreseeablefuture. Neodymium based magnets, considered ideal for EVs, are set to see rise in demand and grow rapidly in the coming years. The International Energy Agency (IEA) has projected substantial growth in EV fleet over the next decade. Furthermore, REEs are an integral part of modern electronic gadgets such as laptops, cell phones, hard drives, etc. and is expected to boost the global demand over the forecast period. Apart from their use as permanent magnets in electronics, rare earth elements are also used as glass polishing powder for mobile phone and tablet screens.

There is also a growing trend in recycling of rare earth elements as this will alleviate market volatility and supply issues. It is one of most overlooked facet to break dependency on China’s monopoly in the market. Newer technologies and innovation in recycling are expected to create new opportunities for rare earth elements market over the coming years. Reclaiming rare earth elements from end-of-life electronic devices are likely to open new business avenues for the new players in the market.

Market Vulnerable to China’s Trade Policy

One of the major challenges in the current market scenario is to establish a robust supply chain outside China. In the recent past, the industry has become vulnerable to various supply chain disruptions owing to tariffs, sourcing restrictions and regulations from China. Current COVID-19 crisis has also highlighted supply chain issues prompting governments and end-users to opt for alternative resources.  Furthermore, firm demand and projected supply shortages with over dependency on China is expected to result in rising prices over the coming years.

New Capacities and Trade Partnerships has Gathered Momentum Outside China

State-backed investment in both technology and infrastructure has given the China base companies upper hand in the market. These companies largely control the prices and make it challenging for other regions to compete. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co.,Ltd., China Minmetals Corporation, China Non-Ferrous Metal Mining, JL MAG RARE-EARTH CO., LTD., and China Rare Earth Holdings Limited are the major companies operating in China.

Outside China, Lynas is one of the largest producers of rare earth elements. The company extracts ore from Australia and sends to Malaysia for further processing. Australia is also looking at India as its trading partner for rare earth elements. India currently has one manufacturer IREL Limited, a government owned corporation.

Private companies have opportunity to enter into the market with financial and operational flexibilities. U.S. government is also planning to bring on one or more projects to curb its dependency on China. Currently, the only rare earth mine in the U.S. is owned by MP Materials and ships majority of its concentrates to China for further processing. Russia also has unveiled a US$ 1.5 Bn plan with cheaper loans and lower mining taxes to compete with China’s monopoly on the rare earth elements market.

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