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Rare earth elements are strategic metals of the future

19 september 2022

Rare earth elements (REEs), rare earth metals (REMs), rare earth metal oxides, rare earths - these are the names of 17 metals of the future the world powers are competing for. It is referred to, in particular, scandium, yttrium and 15 lanthanide elements, including lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium, lutetium. These elements are usually divided into two groups - light and heavy metals. As a rule, the concentration of the light metals in the earth’s crust is greater than that of the heavy ones.

The word “rare earth” should not be misleading, as it does not mean that these are rare metals. On the contrary, they can be discovered even more often than copper, lead, tin or gold. Metals are called so because they are extremely rare in the earth’s crust in a concentrated (rather than dispersed) form suitable for use on an industrial scale, in other words, in a commercially profitable form. This is the first special feature of rare earth metals.

The second special feature is that the recovery of these elements from primary ore raw materials is a very complex and extremely costly process requiring special competencies, technologies, specialized chemical and metallurgical enterprises, infrastructure, and logistics. In fact, the formation and development of the rare earth metal industry are possible only with the direct support of the state, including, in particular, government investments.

The third special feature is that mining and recovery of REMs is an energy-intensive process requiring a huge amount of water. It causes significant damage to the environment, which requires additional funds to eliminate negative consequences for nature and humans. For example, the production of 1 ton of REM concentrate results in the formation of approximately 1 ton of radioactive waste - thorium and uranium, according to experts.

The fourth special feature is that although rare earth elements make a small share in the GNP, their contribution to the creation of value added at each stage of the production chain is huge. That is, REMs may not be present in the final product, but they may be irreplaceable at one of the production stages (for example, cerium- and lanthanum-based reforming catalysts are used in the gasoline production).

Often, rare earth metals are called “vitamins for the industry” and “elements of progress and innovation”. And there’s a rationale to that. After all, the REMs’ share in the final product is a guide to the level of innovative development and science intensity of production, and, in general, the technological independence of the state.

The fifth special feature is that the use of rare earth elements and the scope of their application expand with higher scientific and technological progress. In fact, it is impossible today to do without them in the nuclear power industry, as well as in the space, medical, defense, metallurgical, automotive, glass, and oil industries. Meanwhile, it should be kept in mind that at each stage of the scientific and technical progress, not all 17 REMs are equally used: we see a decreasing demand for some elements (for example, europium, samarium), and vice-versa, a decreasing demand for neodymium and dysprosium.

The sixth special feature is that REMs will be critical in the transition of countries to a new technological mode, the core of which will be bio- and nanotechnologies, space and nuclear industries, as well as a “green” energy sector. That is why REMs are considered strategic metals, their availability in the country is a prerequisite for ensuring national security.

In this regard, it is important to mention the seventh special feature of REMs, which is increasingly seen in the West in connection with the anti-Russian sanctions. It is referred to the desire of Europe to make the transition to “clean” energy as an alternative to the rising price for the Russian gas.

In particular, on August 29, 2022, the President of the European Commission Ursula von der Leyen announced at the International Strategic Forum in Slovenia that the European Union would invest €300 bn in “green” energy. It is important to note in this regard that the transition to “clean energy” will spur demand for non-ferrous metals and rare earth elements required for the operation of, for example, wind turbines and solar panels. Without them, no transition to power generation based on renewable energy sources is possible. At the same time, the prices for these elements will inevitably soar provided that the REMs’ supply is constant, and it is unlikely to increase their supply in a short time, especially considering that China is the main producer and supplier of rare earth metals to the world market.

Here is just one example. Professor of geochemistry Peter Kelemen emphasizes:Every megawatt of electricity needs 200 kilograms of neodymium—or 20 percent of one ton. So if every big wind turbine produces one megawatt, five turbines will require one ton of neodymium. If wind is going to play a major part in replacing fossil fuels, we will need to increase our supply of neodymium.1

All this taken together determines the high cost of rare earth metals (i.e., the REE that are scarce due to the high demand for them) in the global markets and predetermines the future rising competition among the world powers for access to the REE deposits.

How it all began

The first rare earth elements were discovered in 1787 near the village of Ytterby in Sweden. That is why the rare earth elements got their name - yttrium, terbium, erbium, and ytterbium. By 1907, scientists had discovered 16 REEs. The existence of the 17th element - promethium - was confirmed only in 1947. Thus, 160 years later, the world received all the rare earth elements at its disposal, which proves the complexity of the process of their recovery, requiring advanced knowledge, expertise and cutting-edge technologies.

In general, the rare earth metal industry which developed in Europe at the end of the 18th and beginning of the 19th centuries developed rapidly in the United States in the mid-20th century. This was largely due to the discovery of the Mountain Pass deposit in California in 1949, which remained the main source of REMs until 1985 and provided most of the REMs’ world consumption. Thus, the USA was the global REM industry’s leader not only in mining, but at every stage of their production. In 2002, the Mountain Pass mine was closed due to environmental damage and competition from China.

Since 1986, the Celestial Empire has taken the lead roles. China, thanks to a targeted state policy for the development of REMs, has become a monopoly in the REM global market.

Meanwhile, since the turn of the century, the China’s share has also changed. Until 2011, Beijing controlled 95% of the global market for rare earths, then its share began declining. This, in particular, was facilitated by the Chinese authorities who limited the rare earth metals’ exports in 2010. At the same time, the demand for rare earth metals from the PRC is increasing, as the country produced increasingly more end products using rare earth metals.

In turn, the import-dependent states (first of all, the USA, Japan, Australia) began to make efforts to find alternative sources of supplies, including through exploration and development of their own deposits. In the USA, for example, the mining and production of REMs was resumed in 2012 after a nine-year break.

Pattern of demand for REMs

As already noted, REEs are used in various industries due to their catalytic properties. For example, scandium is used in the manufacture of aerospace equipment. Yttrium is used in the production of high-temperature superconductors. Lanthanum is needed for the production of optical instruments and the manufacture of battery electrodes. Ytterbium, dysprosium, holmium and erbium are used for laser technology.

Recently, the demand for REMs has increased drastically due to the constant magnetism shown by their alloys. Constant magnets accounting for 38% of global demand are used virtually everywhere: in cell phones, TVs, computers, motor vehicles, jet aircraft, defense equipment, and more.

The “clean energy” is expected to significantly increase the demand for REEs, as constant magnets are critical for direct drive wind turbines and electric vehicle motors.

In order to better understand the key applications of rare earths, you can look at Chart 1:

Chart 1.

analyt_19092022_1.png

Source: kleinmanenergy.upenn.edu   

(From left to right):

Constant magnets. Catalysts. Polishing powder… Battery alloys. Metallurgy and alloys. Ceramics, dyes and … Others. Phosphorus.

World reserves of REMs

According to estimates, the world reserves of rare earth elements amount to 120 mn tons. The leader is China with its 44 mn tons (about 36.7% of all reserves). China is followed by Vietnam with its 22 mn tons, Brazil - 21 mn tons, and Russia - 21 mn tons.

Chart 2.

analyt_19092022_2.png

Source: statista.com

(From left to right):

China. Vietnam. Brazil. Russia. India. Australia. USA. Greenland. Tanzania. South Africa. Other countries.

From Chart 2, it is seen that the BRICS countries (Brazil, Russia, India, China, and South Africa) taken together have 77.5% of the world’s explored rare earth metal reserves. For comparison, the combined potential of the USA and Australia is 5.8 mn tons, or 4.8% of the world reserves.

World production of REMs

Over the past 40 years, the global production of REMs has increased by more than 11 times due to the rapid development of technology. In 1980, 25,000 tons of rare earth minerals were mined in the world, in 1994 - 64,500 tons, and in 2021 - 280,000 tons.

The global market for rare earth elements in 2021 was estimated at $8,791.29 mn. The average annual growth rate is expected to be 4.74%, reaching $11,609.58 mn by 2027.

At present, China dominates the rare earth metal market, the country produces about 60% of the world’s REMs (168,000 tons in 2021), recycles about 80%, and is a key player in the global supply chain. The largest economies in the world are completely dependent on the Chinese supplies. Therefore, a possible suspending or even limiting their supplies will result in an increase in prices for rare earth metals, and may also cause serious damage to industry and the plans for the European economies’ decarbonization. This forces the countries to look for alternative sources.

The China’s expansion into the rare earth metal market began over 40 years ago, back in 1981, when the giant Bayan-Obo (also called Bayun-Obo or Baiyunebo) deposit was discovered and developed, its potential was estimated at 36 mn tons of rare earth metal oxides, which made 30% of the world reserves.

Despite the fact that the USA has insignificant reserves of REMs (see Chart 2), the country is nevertheless the second largest producer of REMs. In 2021, they received about 43,000 tons of REM concentrates, which made 15.5% of the global production. China and the USA were followed by Myanmar (Burma) and Australia with the output of 26,000 tons and 22,000 tons, respectively.

As noted above, until recently, China controlled the production of almost 95% of REMs. In 2011, with a world production of 111,000 tons, China accounted for 105,000 tons (for comparison, the United States did not produce REEs at that time). This is explained by significant REM reserves, their high grade and low cost, which allowed China to establish control over the global market for rare earth metals. Now, this share has decreased for the understandable reasons, as the PRC strives to create goods with high added value. Reducing the REMs’ exports, the country simultaneously increases the output of finished products based on them, and this indicates that China turns into a high-tech power.

The drastic reduction (by 72% in H2 2010) in the China’s supplies of REMs to the world market has led to an unprecedented rise in prices. The weighted average price of rare earth metal oxides soared in mid-2011 to $190/kg. At the end of 2012, the prices dropped to $30-40/kg. The scarcity of REMs and an unprecedented rise in prices prompted the states, in particular the USA, Australia, Canada, etc., to explore and actively develop alternative REM deposits. In general, this is still a priority, especially in the context of the energy transition to alternative energy.

As for the reserves and production of rare earth metals, it is worth taking a closer look at South Africa as well. South Africa in the future could well compete with at least the United States and Australia in the world REM market. With its reserves of 790,000 tons, South Africa closes the top ten countries with the largest reserves of rare earth elements.

In South Africa, the Steenkampskraal mine is located in the Western Cape province that is estimated to be the highest-grade rare earth metal mine in the world and will, therefore, have low mining costs. For example, the neodymium grade is 2.58% and the reserves are 15,600 tons, which is higher than the total grade of rare earth elements in most other similar deposits. Each ton of ore at the Steenkampskraal mine contains approximately $3,750 worth of REMs, much higher than any other rare earth element deposit in the world. All this confirms that this field has great potential and clear competitive advantages.

USSR/Russia and REMs

In the USSR, the Ministry of Medium Machine Building Industry was responsible for the development of the rare earth metal industry, which proves that the country’s government gave priority to it. Of course, at that time, REMs were used primarily for the needs of the defense industry.

However, thanks to this, the Soviet Union had a powerful rare earth metal industry and a leading position in the global rare earth metal market. The USSR ranked 3rd in the world in terms of REM production and 2nd in terms of the REM reserves.

In 1990, 8.5 thousand tons of REMs were produced. About 5,000 tons were consumed within the country, thus, the Soviet Union fully satisfied its internal needs, and was also able to export rare earth metals.

With the collapse of the USSR, Russia, unfortunately, essentially lost the rare earth metal industry. Out of the 9 enterprises of the REM industry, only the Solikamsk Magnesium Factory in the Perm Territory has survived. The rest factories were either shut down or remained outside of Russia - in Kazakhstan, Kyrgyzstan, Estonia, and Ukraine.

The topic of the rare earth metal industry revival in Russia has been discussed for many years. However, there has been no major breakthrough in this field so far. Despite the fact that Russia shares the third place with Brazil in terms of the REE reserves, its share in the global production is maximum 1% (in 1991, it was 15%).

To date, the rare earth metals in Russia are mined at the Lovozerskoye loparite deposit in the Murmansk Region. The concentrate obtained at the Lovozersky Mining and Processing Plant is supplied to the Solikamsk Magnesium Plant producing max 2,000 tons of the REM carbonates. Almost all the REM products are exported to the Silmet Factory (Estonia) owned by Neo Performance Materials (Canada). At the same time, rather small Russia’s needs in REMs (1,000 tons to 1,100 tons) are met mainly through imports, which makes the country critically dependent on its foreign suppliers.

At the recent Eastern Economic Forum, the Russian President drew special attention to solving the problems related to providing the national economy with critical raw materials, in particular, niobium. In my opinion, Russia has everything necessary to do this, first of all, it is rich in the REM raw materials. For example, in addition to the Lovozerskoye deposit, there is the Tomtorskoye deposit (Yakutia) in the country; this deposit is one of the largest in the world in terms of rare earth metal reserves, including niobium, yttrium, scandium, lanthanum, cerium, praseodymium, neodymium, samarium, europium, and titanium. And there are rather promising Chuktukonskoye deposit in the Krasnoyarsk Territory, the Zashikhinskoye and Beloziminskoye deposits in the Irkutsk Region, the Katuginskoye deposit in the Zabaikalye (Trans-Baikal) Territory, and etc.

Given the difficult global geopolitical situation, numerous sanctions imposed on Russia by several “unfriendly” states, ensuring national security is a burning issue, in particular, through the availability of critically important resources that, certainly, include rare earth metals. After all, both the state’s defense potential and the development of the promising “sunrise” industries, and hence the place of Russia in the new world economic space, depend today on the availability or absence of REMs.

Margarita Obraztsova for Rough&Polished

1 https://news.climate.columbia.edu/2012/09/19/rare-earth-metals-will-we-have-enough/