Rare earth elements form an integral part of numerous applications we use in everyday life, from the phosphorus in television screens to the polishing powders used to produce microchips. Historically, the rare earths industry has been dominated by the high-volume, low-value elements used in such areas – but the energy transition is providing key opportunities for growth.
At the recent Future Facing Mined Commodities Forum, we explored how key energy transition industries are reliant on rare earths to meet efficiency and emissions targets and what that means for prices and demand.
Got 20 minutes? Fill in the form to access a complimentary replay of the full webinar, which draws on unique insight from our Rare Earths Research Suite. Got five minutes? Read on for a brief overview.
Rare earths and their role in the energy transition: seven key themes
1. Rare earth elements are crucial to ensuring the efficient conversion of energy stored in battery technologies to kinetic energy, and visa versa.
Moreover, the ability of rare earths to enhance certain characteristics and properties of other metals or alloys and compounds has enabled the production of more efficient or miniaturised products, allowing for the reduction in size of products such as speakers, mobile phones and other electronics.
2. The rare earths used in high-strength magnet alloys are most in demand from energy transition technologies.
The array of rare earths in demand has shifted quite significantly over the past 20 years, with high-volume, low-value elements such as lanthanum and cerium giving way to higher-value, though less abundant, elements such as neodymium, praseodymium and dysprosium.
The increasing use of these less abundant elements has also required a shift in the mined and refined supply of rare earths. This is accelerating the development of certain projects with better rare-earth distribution, while also incentivising the development of secondary or recycled production.
3. The supply of rare earths is dominated by China – but the global market is evolving.
The majority of rare earths are sourced from the primary extractive sector, but recycling is gaining in importance. Though mine production has become more geographically dispersed, refined production of rare earths remains strongly concentrated within China, often supported by imported feedstocks and semi-processed rare earth materials.
China continues to move downstream within the rare earths industry, increasing its market share in fast-growing and value-added end-use markets.
4. Electric vehicles use permanent magnet (PM) motors for efficiency, size and weight benefits, though security of supply and traceability concerns remain.
PM motors have become the motor technology of choice for many manufacturers, particularly in China, the largest EV market globally.
That each PM motor in an electric passenger vehicle contains 1-3 kilograms of neodymium-iron-boron (NdFeB) magnet material should see automotive drivetrain applications increase their share of total rare earth magnet consumption from around 16% last year to roughly a third of all consumption by 2036.
5. Due to availability concerns and higher costs, we’re seeing thrifting of heavy rare earth elements through processes like grain boundary diffusion (GBD) and substitution.
Unlike battery technologies, the use of rare earths in drivetrain motors has much greater potential for substitution, despite the efficiency gains they can bring.
There is ongoing research and development into different types of PM motor, particularly axial flux synchronous PM motors, which offer greater efficiency than existing radial flux motors and higher-powered units.
6. Wind generation is seeing reduced intensity of use of rare earth elements as mid-speed gear drive (MSGD) technology gain market share from low-speed/direct-drive gear systems.
This is dramatically reducing the intensity of use of rare earth PMs per megawatt of capacity, though the reduction in PM intensity of use will be outpaced by the overall increased in onshore and offshore capacity. Overall, rare earth PM demand from wind energy applications will see a compound annual growth rate (CAGR) of 15.8% through 2030. This is expected to slow soon after however in the face of further market-share gains by MSGD systems, in particular.
7. High-growth markets are likely to see continued increases in magnet demand, despite falling intensity of use, keeping pressure on prices for key rare earths.
Rare earth prices for key magnet elements and alloys have increased significantly since mid-2021. Prices for neodymium, praseodymium and heavy rare earths such as dysprosium and terbium set new 10-year highs early this year.
Neodymium-praseodymium (NdPr) oxide for the production of rare earth alloys used in the magnet industry has been the market’s main focus, with prices in 2022 to date increasing by roughly 28%. Now the rapid increase in prices is being passed down the supply chain, making permanent magnet products more expensive
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