The fairest rare earth element of them all
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(Kitco News) - The unusually strong magnets found in Buckyballs and other toys made from rare earths are not just a diversion, but a crucial material for transport, electronics and renewable energy.
Rare earth elements are 17 metals with unique magnetic, fluorescent and chemical properties, according to a description by Canada Rare Earth. The magnetic properties of the select few rare earths, particularly neodymium, are much sought out and will underpin much of future technology being built.
Professional investor Marin Katusa singled out this rare earth element's cruciality in a recent Kitco commentary.
"Rare earth elements are crucial to two major differentiators moving forward: wind turbines and electric vehicles," writes Katusa. "Because of their incredible magnetic properties, permanent magnets are replacing the gear box for direct drive wind turbines. In other words, if nations want to go green, they must have REEs."
Global Market Insights concurs, singling out neodymium as a market leader.
"Based on metal, the neodymium is leading the market growth followed by scandium and dysprosium. In 2019, neodymium, scandium as well as dysprosium represented a market share of nearly 30%, 17% as well as 10%. Among these, neodymium is extensively utilized in the renewable energy sector and electric vehicles among others and scandium alloys are broadly used in the aircraft and aerospace industry," the research firm wrote in June.
Widespread utility won't necessarily lead to substitution. Unlike well-known electric vehicle materials, such as cobalt, neodymium's unique properties make it hard to replace.
"I do not see [substitution] playing out with permanent magnets," writes Katusa. "Neodymium magnets have the highest magnetic force among all magnets in the world. In addition, they offer excellent heat resistance and coercivity (resistance to demagnetization)."
Marin notes that Toyota has done research on removing some neodymium from permanent magnets. The Japanese auto giant tried to substitute neodymium with lanthanum and cerium, two cheaper rare earth metals. The swap resulted in lower performance and higher deterioration.
Rare earths with magnetic properties are not being produced in sufficient quantities, wrote Adamas Research in a report released in September.
Adamas Intelligence forecasts that the value of global magnet rare earth oxide consumption will rise five-fold by 2030, from $2.98 billion this year to $15.65 billion at the end of the decade.
"If the global industry continues to operate myopically – preparing, anticipating and investing only for a three to five-year outlook – the rate of demand growth for magnet rare earths will soon reach ‘escape velocity’; a point at which annual demand growth becomes so great (i.e. 6,000 tonnes per annum) that it is simply implausible for the already-lagging supply-side to catch up and keep up," writes the reports authors.
The research firm said "...a flood of investment is imminently needed to develop new sources of supply and downstream value chains to convert that supply into metals, alloys, magnets and other materials used by high-tech industries globally."
Adamas forecasts an under-supply of neodymium, praseodymium and dysprosium oxide from 2022 onward. Global shortages of NdFeB alloy and powder will amount to 48,000 tonnes annually by 2030 – roughly the amount needed for some 25 to 30 million electric vehicle traction motors.
Also neodymium, praseodymium and didymium oxide demand will collectively rise to 16,000 tonnes in 2030, an amount equal to roughly three-times Lynas Corporation’s annual output, or three-times MP Materials’ annual output, of neodymium and praseodymium oxide (or oxide equivalents).
Global Market Insights growth rates are more conservative. Global estimated that the rare earth metals market hit $13.2 billion in 2019, and by 2026 production will hit $19.8 billion, giving REE's a compound annual growth rate of 10.8% over six years.
Diversifying China's Lock On Supply
China has a lock on rare earth supply. The U.S. Geological Survey estimates that rare earth imports of REE from the Middle Kingdom will hit 80%.
In July the U.S. Department of Defense announced funding for two projects to process rare earth minerals for military weapons after a review found the grants are in the best interest of the U.S. government, according to documents seen by Reuters. The Pentagon on April 22 awarded Australia's Lynas Corp and privately held MP Materials funding for rare earths separation facilities in Texas and California, respectively. In October, the Trump administation issued an executive order to examine America's reliance on rare earths from China.
A numnber of initiatives were announced in 2020 to meet growing demand, as well as quit reliance on China's supply:
- At Mountain Pass in California, the Western hemisphere's largest single source of rare earth, MP Materials (NYSE:MP) was a recipient of funds from the Defense Department. It said it raised $545 million to full fund a "three-stage business plan to restore the full rare earth supply chain to the U.S." The company is already shipping concentrate. On-site refining is planned for 2022, and NdPr magnet production is planned for 2025.
- Lynas Corporation (ASX:LYC, OTC:LYSDY) of Australia is currently the world’s largest non-China producer of magnet metal rare earth oxides from its facility in Malaysia. In August the company announced it signed a sublease with Kalgoorlie to build a rare earth processing facility, which is expected to be operational mid-2023.
- In August the Saskatchewan government announced it was funding a C$31-million rare earth processing facility in the hope the facility will act as a catalyst and form a industry model for future commercial REE resource expansion in the province.
- In December Pensana Rare Earths (LSE:PRE, ASX:PM8) announced that it found a site in Britain to build the UK’s first rare earth processing facility with a view to helping create the world’s first fully sustainable magnet metal supply chain. The company is advancing its Longonjo project in Angola to supply the processing facility.