Decoding the Financial Potential of Rare Earth Elements

Rare earth elements (REEs) are vitally important components in modern technologies, yet their mining and processing can be both challenging and expensive. Furthermore, toxic by-products may result from these processes.

China holds the vast majority of global REE reserves and produces 85 percent of REE oxides and 95 percent of finished REE products, raising serious concerns that critical supplies would rely solely on this one country for production and supply.

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Origins

Rare earths (REEs) are an invaluable group of metals with unique properties that make them indispensable in high-tech manufacturing, but their widespread usage also contributes to greener living: for example, making the switch from fossil fuels to electric vehicles will necessitate increasing REE production for motors and batteries; plus REE atomic resonance is used as medical diagnostic agents like MRI contrast agents and NMR relaxation agents.

These elements are rarely present in rock deposits in sufficient amounts for economic mining. Because their physical characteristics such as their atomic radius and charge are similar, it has proven difficult to separate them until recent technological developments made the process economically viable.

Due to their essentiality for modern technologies, rare earth elements (REEs) are in high demand. China currently dominates this market; extracting and refining 95% of world REEs. But this dominance may soon change: other nations are investing in mines and separation facilities which could challenge China's hold over REE production.

"Rare earths" may be an exaggeration, but their name was appropriate when they were first discovered as components of complex oxides in the 18th century. Additionally, this name implied they were scarce - in reality however they can be found throughout the world in abundant workable deposits - 16 are known to occur naturally across 50 percent or more of Earth's crust!

As rare earths supplies were put at risk in 2010, governments and companies alike were forced to reconsider their dependence on these essential elements. Businesses like car makers and electronics producers that depend heavily on REEs realized they must secure alternative sources in order to prevent supply disruptions from taking place.

Gholz believes that most industries reliant on REEs for military applications will be able to manage in the short-term without REEs as long as they maintain stockpiles of this material.

Rare earths' high price has already raised significant concerns about their future availability. Mining and separation costs can quickly add up to more than the total value of raw metals themselves; additionally, opening a mine takes many decades and these resources may only become fully available when fully mined.

Purity

Rare earth elements stand out from other industrial metals by having unique magnetic, luminescent, chemical and physical properties that distinguish them. Due to this property they have become integral components in an array of high-technology applications which drive global economies while having substantial environmental benefits; many don't even have equivalent replacements available on the market today! Their significance can be gauged from this fact alone: no equivalent exists for many of them!

Rare earths have become an indispensable component in products ranging from computers and cell phones to DVD players and rechargeable batteries, with demand continually outstripping supply. As more products require rare earths for production purposes, so has demand - increasing both demand and supply needs exponentially.

MRI magnets require two of the most commonly found rare earths: neodymium and dysprosium - two of the most prevalent rare earth elements used to form permanent magnets. Schelter's laboratory has developed an inexpensive chemical process to separate these metals quickly and cheaply, potentially opening the way to recycling rare earth elements at cost-competitive prices, thus decreasing overall market demand while making industries dependent upon these elements more resilient against price increases.

Recycling rare earths could also provide companies looking to promote their green image with incentives to invest in products made with recycled rare earths over those made with mined ones. Because mining and separation processes are costly, recycling costs currently appear artificially low compared with their counterparts made with mined material; should that change in future, businesses might see greater motivation to choose this alternative form of rare earth investment.

Scientists have recently begun their hunt for new sources of REEs. Acid mine drainage--toxic waste water from abandoned coal mines--contains REEs and key minerals, making it an excellent source of these materials. Also, byproducts from fertilizer manufacturing such as phosphate gypsum contain rare earth elements; while often stored as an expensive liability, it could provide sustainable production alternatives through extraction methods.

Rare earth supplies have become an urgent domestic need, particularly with China accounting for most of global consumption of these minerals. Trade tensions between the US and China have brought greater focus to this issue with President Xi visiting one of China's main rare earth mining sites and using tariffs against an American rare earths company in California.

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Applications

Rare earth elements play an essential role in high technology today, from consumer electronics like Apple AirPods and iPhones, electric vehicles, green technologies as well as military applications like F-35 jet fighters and nuclear submarines.

One of the primary applications of rare earths is magnets, accounting for roughly half of global production. Other applications for rare earths include metallurgy, catalysts, glass/ceramics/ceramics production systems as well as communication systems.

As green energy sources emerge, demand for rare earths has skyrocketed. Electric vehicles (EVs), for instance, require powerful rare-earth magnets to power their motors; solar, wind and hydropower also rely on rare earth magnets for operation. Following COVID-19 pandemic-related demand reduction, rare earth magnet sales are anticipated to experience compound annual compound annual growth at 10.0% between 2021-2028.

Rare earths are an inherently scarce resource and their prices reflect this scarcity. Most rare earth mines are located in China where they are used in manufacturing electronics and magnets - China controls more than 90% of global supply, thanks to low prices which have helped it build an extensive refined industry.

As mining can be environmentally harmful and produce toxic waste, more industries are seeking alternatives. Many are even turning to recycled rare-earth elements in lieu of mining entirely.

These recycled rare-earths can often be cheaper than their mined counterparts and provide an eco-friendly alternative for an insufficient resource. Unfortunately, however, production time lags behind between making a decision to invest in new rare-earth technologies and actually starting production.

As the world moves towards a lower carbon future, demand for rare earths is set to surge and investors look for opportunities in these precious metals. However, as prices increase so does the risk of supply shortage. Investors should carefully assess opportunities in this space to minimize this risk while diversifying their portfolios by including projects with diverse geology and mineralogy characteristics.

Markets

Rare earth elements cannot function effectively as productive forces without social and financial support, including investment from society and finance. Rare earth elements need human input and investment in order to transform into useful products such as high-tech gadgets like Apple AirPods or iPhones, General Electric wind turbines, Tesla electric cars or military hardware such as F-35 jet fighters - they play an essential part of today's modern economy!

Current global demand for rare earths is projected to increase over the coming years, due to an increase in nuclear power generation which utilizes significant quantities of neodymium and dysprosium in permanent magnet motors used at power generating stations and reactors, as well as increasing interest in electric vehicles which require significant quantities of these elements for batteries and motors. EVs also contribute significantly by using more permanent magnets featuring these rare metals than previously predicted.

China still dominates the rare earth market, yet many investors remain optimistic. A number of companies have begun developing their own rare earth extraction and processing operations; financial support from Australia's central government has incentivised several projects such as Iluka Resources' Eneabba refinery and Arafura Resources' Nolans project by Iluka Resources and Arafura Resources respectively; additionally, Lynas' Texas plant will soon offer light REE separation capabilities supported by funding by US Department of Energy.

Yet it remains difficult for any single company to generate profits in the rare earths market; leaving markets susceptible to political interference from China. Longer term, however, China would likely fail to monopolize rare earth production and export. There is simply too much global demand for them - many experts predict that global rare earth industry would remain viable even if China stopped exporting altogether. Rare earths offer investors a potentially lucrative investment opportunity that's well worth exploring further. This report delves into key trends and opportunities in the rare earths market for investors as well as segmentation analysis from 2017-2030.