Famously abundant but difficult to extract, rare earths have
been the mining industry’s surprise comeback story
of 2017, due largely to a revival of interest in electric
vehicles (EVs) and renewable energy.
Following a spectacular boom in 2010 and bust in 2012, for
the past five years the rare earths industry has been
characterised by global oversupply, stagnant-to-declining
prices, investment scams, and the gradual disappearance of
junior mining companies exploring for the minerals.
This year, however, rare earths prices, which had fallen to
levels at which it was barely worth extracting them, have seen
a strong recovery – albeit from a historically low
China, whose effective monopoly over the
world’s access to rare earths and whose decision
to halt shipments to Japan in 2010 following a political
dispute helped to inflame the supply panic seven years ago,
remains by far the biggest global producer of rare
According to Research and Markets’ "China
Mining Sector Report 2017/2018", the country still supplies
more than 90% of the rare earths traded globally, although
other estimates put this figure at over 80%.
Onshore wind power is projected to account
for a quarter of all new power generation
capacity additions globally over the next 23 years,
according to forecasts by
Bloomberg New Energy Finance.
Source: US Fish and
Wildlife Service Headquarters’
Photostream, via Flickr
Chinese government-led measures to curb pollution from
mineral and basic material processing plants have reduced
supply at a time when demand for these products is rising. This
confluence of factors has already driven up prices of magnesia,
aluminium and steel and have more recently affected rare
But this time around, rising prices have not triggered any
trading or political hysteria. Since it became clear that it
was not in China’s interest to cut off shipments
of rare earths to the rest of the world, the focus has shifted
to how society can profit from using these minerals, rather
than how easy or difficult it is to source them.
The main growth market for rare earths is in permanent,
high-strength magnets. These are used in the motors of some
EVs, wind turbines, consumer electronics and smart phones, the
consumption of which is predicted to expand at a healthy rate
for the foreseeable future.
China Northern Rare Earth Hi-Tech Group Co. Ltd, which is
the largest producer of rare earths in China and, consequently,
the world, has been among the principal beneficiaries of the
rebound in rare earths prices.
Its Shanghai-listed shares have risen by more than 50% this
year and in September, the company reported a 258% surge in
half-year net profit year-on-year (y-o-y) to Chinese renminbi
(RMB) 112m ($13m*).
China Northern has increased its prices for both oxide and
metal forms of neodymium and mixed neodymium/praseodymium
(NdPr) every month from January to September (see Table 1).
According to consultancy Adamas Intelligence, neodymium and
praseodymium oxides are priced in tandem, which amplifies the
effect of price increases.
China Northern also raised its prices for cerium oxide four
times in the year to September and three times for lanthanum
Both cerium and lanthanum are low-value light rare earth
elements, which are among the easiest to extract from their
ores and are frequently cited as being in chronic
By contrast, NdPr products, which are also light elements,
have a wide range of applications and are currently among the
most valuable rare earth materials traded.
According to China Northern’s first-half
results statement, its September sales prices for mixed
praseodymium/neodymium, both oxide and metal, were 96% higher
than they were in January, while prices for neodymium oxide and
metal increased by 88%.
The company’s prices for oxides of lanthanum
and cerium rose more modestly over the nine-month period, by 7%
and 40%, respectively – but this marked a sharp
turnaround from the steadily declining trend in the value of
these products over the past six years.
The charge of EVs
Anticipated growth in the EV market has already driven up
prices of once-niche minerals, including lithium and cobalt,
but rare earths had lagged behind – partly due to
market scepticism towards the sector after its 2010 spike.
This year, however, figures projecting rising consumption of
rare earths by EVs have been backed up by increases in trading
volumes and prices for the minerals. Meanwhile, the relative
absence of hype has allowed for calm discussion in the media
and among academia and analysts about how rare earths are used
in new technologies.
Some EV makers use permanent magnet motors, which typically
contain NdPr, because they are lighter and more powerful than
alternative induction motors, which helps to extend a
Analysis by Argonaut Research suggests that the use of
magnets in EVs and wind turbines will push up demand for
neodymium and praseodymium almost 250% over the next 10
Rare earths are already widely used as catalysts in internal
combustion cars, but Argonaut estimates that EVs use around 1kg
more rare earth oxides per unit than petrol and diesel-driven
Global sales of electric vehicles increased by 55% last year
to 695,000, with most of these sales taking place in China,
according to data from Bloomberg New Energy Finance
Although this represents just a tiny fraction of the total
number of cars sold worldwide in 2016, EVs are forecast to
account for more than half of new sales by 2040 when a third of
all cars on the road will be electric-powered, according to
Australian rare earths miner Lynas Corp. recently predicted
that usage of magnetic rare earths in EVs is expected to grow
from around 2,000 tonnes last year to 7,000 tonnes by 2020, and
12,000 tonnes by 2024.
Meanwhile, growth in demand for wind turbines will double
the usage of rare earths in this market to 4,000 tonnes by
2024, according to Lynas. BNEF forecasts that onshore wind
power will account for a quarter of all new power generation
capacity additions globally over the next 23 years.
Lynas is the biggest rare earths miner outside China and was
effectively brought to its knees by the collapse in rare earths
prices. But, with the help of a few refinancings, the company
managed to stay afloat while its US rival, Molycorp Inc., filed
for bankruptcy in June 2015. Lynas’ share price
rose 160% y-o-y in the year to September.
Heavy rare earths like yttrium used to
prices than light rare earths, but these elements
lost ground to lighter elements like
and neodymium which are in demand for EVs and
renewable energy applications.
Source: Rui Costa, via
Change in China
Having been dubbed as an unreliable, self-interested
supplier of rare earths in 2010 after its government cut off
exports to Japan, the shift in attitudes towards China as a
source of rare earths in the past year has been
Although the country is still widely accused by non-Chinese
would-be rare earths producers for flooding the market with
unsustainably cheap material produced in environmentally
destructive ways using unethically low-cost labour, Chinese
companies are now reportedly being approached for long-term
agreements to supply overseas carmakers.
The effect of rising demand for rare earths on prices has
been boosted by Beijing’s efforts to curb illegal
mining, with more than 400 companies inspected in the last year
and dozens having been closed down after failing to produce
The environmental impact of mining rare earths has become an
increasingly visible global issue, as technology leaders like
consumer electronics manufacturer Apple Inc. and EV builder
Tesla Motors Inc. have had their sustainability credentials
But allegations about the damaging environmental impact of
Chinese rare earth production are also beginning to lose
steam, as both companies and the authorities in China have
stepped up efforts to clean up the industry.
China Northern, for example, announced in its first-half
report that it has invested heavily in desulphurisation
technology for both its airborne emissions and wastewater this
International observers, including Hong Kong-based research
and pressure group China Water Risk, argue that a large chunk
of the responsibility for forcing rare earths suppliers to
become more sustainable rests with those further down the
"Businesses and governments buying and using rare earths
need to be accountable for their purchases and products with
rare earths," China Water Risk said in a report last
"They must push for accountability and traceability along
the supply chain. Not only should sourcing information of rare
earths be recorded, but also the amounts used in products and
ideally the amount recycled."
The group also advocates that designers develop clean energy
and smart technology with less rare earth requirements or
better yet, without any rare earths at all – a move
that would be disastrous for China, although China Water Risk
admits that engineering out of dependence on rare earths would
very likely compromise performance.
Chinese producers reap benefits
China Northern, which is owned by the Chinese state,
reported a slight but firm increase in demand for its products
in the first half of this year, which helped to boost its
But the company was eager to stress that one of the main
reasons for the improvement in its earnings was that the
business situation for Chinese rare earths producers has
improved dramatically as a result of a series of recent
national rare earth policies.
These policies include efforts to consolidate the industry
under six state-owned groups, which is intended to ensure a
more disciplined approach to Chinese rare earths supply.
Most Chinese producers have been operating at a loss for the
past few years due to low domestic and export prices.
However, the majority of these companies are vertically
integrated, meaning that they mine the minerals, separate and
smelt them into oxides and metals. This puts them in a strong
position to pass on costs through their own supply chain and
achieve better margins for their products.
China Northern did, however, warn that demand for rare
earths both domestically and internationally was at risk from
weakness in the global economy and said that growth in
downstream applications for the minerals remains slow
It also said that rising labour costs and frequent
government environmental inspections are likely to affect its
profitability this year.
In southern China, the country’s main medium
and heavy rare earths-producing region, prices for most rare
earth oxides have increased steadily since April this year (see
China Southern Rare Earth Group Co., one of the largest rare
earths companies in southern China, started announcing its
prices publicly in April.
Data from the company show that prices for samarium oxide
increased 25% from April to September, while europium oxide
prices went up by 29% and those for yttrium oxide by 50%. Only
ytterbium and scandium oxide prices dropped over the period,
falling by 19% and 57%, respectively.
Another southern Chinese rare earths company, Xiamen
Tungsten Co., reported a 562% increase in net profit y-o-y for
the first half of 2017 to RMB 453m ($52.5m), while China
Minmetals Rare Earth Co. recorded a 173% rise in profits to RMB
26.4m ($3.1m) over the same period.
But not all producers have so far managed to haul themselves
out of the difficulties they faced before rare earths prices
started to rebound.
Rising Nonferrous Metals Share Co. posted a 104% increase in
profit in the first six months of 2017 but still recorded a
loss of RMB 32.3m ($3.7m).
The company attributed the loss to selling large inventories
of rare earth oxides, including dysprosium oxide, at steep
discounts in order to clear stocks. Rising is also not a
vertically integrated producer and has to buy in its own raw
materials, which means its margins are narrower than those of
many of its rivals.
EVs are credited with driving up demand
for a host of once-niche minerals, including
lithium, cobalt and rare earths.
Source: Power Pros, via
Rare earths mining companies are confident that this
year’s market recovery is sustainable. They tend
to dismiss suggestions that the EV boom may be exaggerated, or
that there is a risk rare earths will be displaced by other
materials in certain key technologies.
Independent analysts have been mostly reticent or have
caveated commentary on rare earths’ rebound with
warnings about lurching back into an oversupply situation,
especially if China fails to manage its domestic rare earths
For now, however, it appears that rare earths have pulled off
an impossible feat in regaining both some of their value and
their credibility as a resource worth watching for the
*Conversions made September 2017
Ames Laboratory’s rare earths
Applications such as EVs and renewable energy have caught
the attention of media and investors as promising growth
markets for rare earths, but both commercial and academic
research institutions are working to better understand and
exploit the properties of these minerals.
Alex King, director of the Critical Materials Institute
(CMI) at Ames Laboratory in Iowa, US, spoke to IM about some of
the most significant research currently being undertaken in the
field of rare earth materials.
What research is currently under way at Ames
Laboratory on rare earth elements?
There are three broad areas of active research on rare earth
(1) A range of fundamental research activities, including
work on superconductivity and other, fairly exotic materials
(2) CMI is an Energy Innovation Hub led by Ames, but
involving three other national labs, seven universities and
about a dozen corporations. It focuses much of its effort
on ameliorating shortages of materials that contain rare earth
elements, either by enabling new sources, finding alternative
materials, or finding better ways to conserve existing
(3) The Caloricool initiative, established as part of the US
Department of Energy’s (DoE) Energy Materials
Network and led by Ames Laboratory, is a significant effort to
develop new materials that can enable temperature control
through magnetic cooling. Many of the materials are rare
Ames Laboratory’s Materials Processing Centre
is a major enabler of all of this work, in addition to the work
of many other researchers at different institutions. Among
other things, it provides the purest specimens of rare earth
materials available on earth.
How is this research being
Most of the funding comes from the DoE. A few companies
[whose names cannot be disclosed] are also investing in
What are the main challenges that Ames
Laboratory’s research are trying to
Our research outlined above corresponds, respectively, to
discovery science; alleviating shortages of rare earth
materials that impact technologies that use magnets or provide
light-emission; and bringing a promising scientific discovery
– magnetic refrigeration – to reality as a
Do the fluctuating prices of rare earths have any
impact on the research?
CMI came into being largely as a result of the massive price
spike that affected the rare earths in 2010-11.
Price fluctuations, however, occur in the short term, while
research and development has a longer time-horizon. We
don’t react to price fluctuations; we try to
anticipate them and provide options for dealing with them, if
and when they occur.
What are the main commercial opportunities for rare
earths, currently and in the future?
If Caloricool succeeds in commercialising magnetic
refrigeration, it will revolutionise a whole industry
– providing big improvements in heating and cooling
efficiency, while removing the need for ozone-depleting
CMI has produced more than 75 inventions, including a new
class of aluminium alloys that get their strength from cerium
additions, and have many other attractive features. First sales
have already occurred and this material promises to generate
demand for cerium that is currently overproduced by rare earth
CMI has also invented a means of making magnets by 3D
printing, that shows great promise in enabling new, highly
efficient electric motor designs that need fewer rare earth
elements than current state-of-the-art technologies.
Seabed rare earths exploration
China’s oldest established shipbuilder,
state-owned Mawei Shipbuilding Ltd, known for building imperial
warships in the 19th Century, is constructing a vessel equipped
to trawl the ocean floor for metals and minerals, including
The boat, built to an original design by
Canada-headquartered Nautilus Inc., is scheduled to commence
deep-sea exploration off the coast of Papua New Guinea in early
Volcanic fissures between tectonic plates on the floor of
the Pacific Ocean contain high concentrations of minerals,
which have been eyed for exploration for several years by Japan
and South Korea.
China owns most of the underwater areas deemed prospective
for valuable minerals and has been developing technology to
explore them since the early 2000s, as part of national
Chinese companies have three of the 27 licences awarded by
the International Seabed Authority (ISA) for deep-sea mining in
the Pacific. The ISA is expected to finalise its regulations on
mining at the end of 2017, after which licence-holders can move
beyond exploration into mining.
Plans to mine the seabed, put forward by China and other
countries and private companies, have met with fierce criticism
from environmental groups such as Greenpeace, which argue that
manufacturers should be spending money on trying to reduce
their consumption of virgin natural resources, rather than on
expensive new technologies to exploit new reserves.
Trumped up supply concerns
The spike in rare earths prices in 2010 turned the spotlight
on the US’ dependence on Chinese supply, which has
become a mounting concern for some of the
country’s politicians and was loosely articulated
as one of Republican President Donald Trump’s
In July this year, Trump ordered a review of the
country’s defence supply chain as part of a
wider investigation on how the US can repatriate
manufacturing jobs. His administration claimed that only one
company in the US can now repair propellers for the
country’s navy submarines, as most of the
necessary expertise and resources are now offshore.
In addition to their consumer-facing uses in EVs, wind
turbines and electronics, rare earths are also used in military
lasers and missiles.
The collapse of Molycorp in 2015 reignited calls for the US
to secure non-Chinese rare earths supply, with suggestions
including mining in Afghanistan – although many
critics regard this as a smoke screen for
Trump’s decision to keep US troops in the
country to fulfil other foreign policy objectives.