The Increasing Value of Rare Earth Metals in the Global Market

Rare earths are essential components in many cutting-edge technologies produced today; yet their prices have increased drastically over the past four months as efforts to expand supply and reduce China's grip on the market have proven futile.

Consumer durables like laptops & smartphones are expected to drive demand for rare earth metals over the forecast period, along with renewable energy sources increasing usage which will also add fuel.

Global Market

Rare earth metals are essential components of modern technologies, including electric cars. Magnets made of these elements make driving more efficient while polishing television glass reduces weight. Furthermore, wind turbines use these metals as core components. As renewable energy sources emerge and carbon emission regulations become stricter governments may invest in technologies which reduce dependence on conventional fuels such as these elements will increase in their demand further.

China currently dominates the global rare earths market with their large stock and competitive export prices, driving prices up substantially and prompting more than fourfold price increases over just four months. Without expansion plans breaking China's stranglehold on supply, it appears unlikely these increases will end soon.

As manufacturers attempt to strike a balance between revenue targets and raw material costs, they are forced to seek suppliers that offer them good value. Unfortunately, switching suppliers can be risky and disrupt the supply chain - this may result in either increased costs or diminished quality and consequently lost sales for them.

Asia Pacific's demand for rare earth elements is projected to increase due to an anticipated surge in consumer durable manufacturing such as laptops and smartphones, driven by rising industrialization and construction activities in the region. Furthermore, an anticipated surge in electric vehicle adoption among developing economies is also anticipated to drive rare earth element demand upwards.

Japan is another large importer of these elements, particularly for use in improving electric vehicle efficiency. This trend can be linked to government initiatives to promote renewable sources of energy and address environmental concerns.

Rare earths differ significantly from other precious and nonferrous metals in that they are rarely traded as pure products, but rather offered for sale in various grades of purity ranging from 40%-999% concentration for example; making it hard to track prices accurately due to not always trading on exchanges which means their prices can often remain unpredictable.

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Asia Pacific

The global market for rare earth metals offers great potential for future growth, thanks to rising consumer electronics sales and electric vehicle purchases, rising renewable energy consumption, wind turbine production, solar cell manufacturing and catalytic converter manufacturing - among others.

Growing nuclear energy demand should also contribute to driving up rare earth metals demand. Governments across various regions have begun building nuclear reactors in order to meet electricity requirements of their populations and use heavy rare earth minerals like yttrium for this sector. Asia Pacific markets are projected to dominate global rare earth elements markets owing to China being both the top consumer and producer of rare earth elements worldwide.

Industrialization and construction activities in Asia Pacific are contributing to an increase in rare earth element demand. Consumer electronics will likely experience an upswing due to rising penetration of mobile phones and tablets; automotive sales should see further gains thanks to hybrid and electric vehicle availability - making production of electric vehicle batteries easier while polishing for weight reduction of television sets being another driver for Asia Pacific rare earth metals market expansion.

The coronavirus pandemic has significantly harmed the global rare earth metals market by restricting raw material movement into and out of affected regions, leading to delays in manufacturing metallurgical products as well as disrupted transport of raw materials used for refining, production, refining and magnet production. Truck drivers have even refused deliveries in suspected-host regions resulting in no chemicals needed for producing rare earth metals being provided to production facilities.

North America

North American market for rare earth metals will experience significant expansion during the forecast period. Rising demand for electric vehicles will drive this growth; as this demand will lead to greater use of rare earth elements for battery production, as well as its increased utilization within semiconductor production processes and emerging car makers in North America driving its development further.

China leads the world market for rare earth elements with its massive reserves. China serves both as producer and consumer, although export restrictions could cause shortages that impede manufacturing processes or cause price fluctuations for raw materials.

Prices fluctuate based on supply of raw materials from different countries. For instance, if Chinese production of praseodymium declines significantly, its price will increase and cause manufacturing companies to struggle to meet revenue targets; finding alternate sources of raw material might require them to make risky moves that disrupt production process resulting in potential disruption of final product quality and service delivery.

Numerous large companies operate in the rare earth elements market. These include China Northern Rare Earth (Group) High-Tech Co., Ltd, Rising Nonferrous Metals Co. Ltd and Lynas Corporation Ltd, among others. Many have entered strategic partnerships or agreements among themselves to secure supplies of rare earth elements and decrease dependence on China which dominates this niche market.

Cerium oxide dominates the rare earth metals market with an estimated share of 40%. Lanthanum oxide and neodymium follow, used primarily in magnet production as well as production of electric vehicle batteries. Other rare earth elements with smaller markets include Samarium, Terbium Europium Dysprosium Yttrium.

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Europe

Arctic Sweden could soon become home for production of rare earth metals, which Europe currently relies heavily on for supply - mostly imported from China where demand is highest. The European Commission is encouraging nations to develop local extraction capacities.

An ambitious effort of this scope requires substantial investments in mining and processing facilities as well as higher environmental and social standards - something the U.S. has already taken steps toward, most notably in an executive order issued earlier this year aimed at revamping supply chains for rare metals used in medical devices and chip technologies.

Although rare earths discovered by Swedish mining company LKAB will provide an important new source of raw materials, their first shipment won't reach market for some time due to lengthy permitting processes required to conduct extensive environmental risk evaluations. CEO of LKAB Jan Mostrom asked authorities for help expediting these procedures so as to "increase mining of this type of raw material in Europe."

Rare earth minerals are essential components for manufacturing technologies that support green and digital transitions. Permanent magnets made from rare earth metals are widely used in electric motors found everywhere from cars to wind power turbines; domestic appliances also feature them, along with robotic arm servo motors.

The LKAB deposit may be Europe's largest, but it accounts for only 1 percent of the global total according to the U.S. Geological Survey; therefore it must be supplemented by other deposits globally in order to meet demand.

Rare earths are an invaluable raw material and key component in batteries for hybrid and electric vehicles, yet their mining has long been subjected to scrutiny from activists and regulators. One form of mining practice known as heap leaching -- in which acid is poured on mineral piles to separate them out -- has come under particularly heavy criticism as an environmental hazard, leaving harmful waste behind in groundwater supplies and nearby rivers.