Key energy transition industries are reliant on rare earth elements to meet efficiency and emissions targets.

Rare Earth Elements (REEs) are a set of 17 chemical elements found in the earth’s crust and used extensively in consumer products. REEs form an integral part of numerous applications, 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 creating an exponential demand squeeze.

With supply dominated by China there is an acute need to develop supply within the European Union to secure the burgeoning clean energy manufacturing industry.

“New and more diversified supply sources will be vital to pave the way to a clean energy future.”

Dr. Fatih Birol Executive Director, International Energy Agency

Rare Earth Uses

There are a number of key themes that dominate the Rare Earth Elements arena. The materials are currently primarily sourced from China and are therefore subject to geopolitical concerns. EGT is looking to advance its existing REE projects in Sweden and identify further opportunities within Europe to create a stable supply for the end users in Europe.

China currently dominates the rare earth market

Source: Financial Times

Wind and EVs are the main drivers of increased rare earth demand

Rare earths have a distinct role in the technology, energy transition and net zero with a number of key drivers dominating the market:

Rare earth elements are crucial to ensuring the efficient conversion of energy stored in battery technologies to kinetic energy, and visa versa.

The ability of REE 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.

REE used in high-strength magnet alloys are most in demand from energy transition technologies.

Over the past 20 years the type of REEs in demand has shifted significantly, 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 REE. This is accelerating the development of certain projects with better rare-earth distribution, while also incentivising the development of secondary or recycled production.

The supply of rare earths is dominated by China – but the global market is evolving.

The majority of REE 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 REE industry, increasing its market share in fast-growing and value-added end-use markets. China is dominant at all stages of the REE supply chain, though the global market is evolving.

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 1-3kg of neodymium-iron-boron (NdFeB) magnet material should see automotive drivetrain applications increase their share of total rare earth magnet consumption from around 16% in 2021 to roughly a third of all consumption by 2036.

High-growth markets are forecast to see continued increases in magnet demand.

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. Now the rapid increase in prices is being passed down the supply chain, making permanent magnet products more expensive.