The rare-earth industry is taking another of its periodic
turns in the spotlight, with governments once again fretting
about the concentration of production in China, given the key
role of these metals in huge parts of industry and
But whereas previous supply panics, such as those triggered
by Chinese export restrictions in 2009-10, have been
particularly focused on the role of rare earths in the defense
industry, current concerns are much more related to the
importance of rare earths in new energy technology. For
example, rare earths are key ingredients for the high-strength
and durable magnets used in the drivetrains of electric cars,
and in the turbines of wind-power plants.
The price of these rare earths is booming. The price of NDPR
oxide, which contains neodymium and dysprosium and is the key
element in rare-earth magnets, was $68.20 per kg in the first
three of months of 2021, according to rare earth producer
Lynas. This was up from $35.00 per kg in the corresponding
period of 2020.
Prices for dysprosium and terbium, which are added to
rare-earth magnets to increase heat resistance, are also rising
fast. Over the same period, the cost of dysprosium oxide has
risen year-on-year to $407.70 per tonne, from $222.00 per
tonne. And terbium oxide prices have risen to $1,336.00 per
tonne, from $477.00 per tonne.
It is also becoming clear that the drive to meet the carbon
restriction targets of the Paris Climate Agreement, which the
United States officially rejoined in 2021, will spur massive
further demand for minerals, including rare earths.
To reach the target of net-zero emissions by 2050, the
energy sector will be consuming minerals at six times the
current rate by 2040, the International Energy Agency (IEA)
forecast in a special report on Wednesday May 5. "Today, the
data shows a looming mismatch between the world’s
strengthened climate ambitions and the availability of critical
minerals that are essential to realizing those ambitions,"
Fatih Birol, the IEA’s executive director,
"The challenges are not insurmountable, but governments must
give clear signals about how they plan to turn their climate
pledges into action," he added. "By acting now and acting
together, they can significantly reduce the risks of price
volatility and supply disruptions."
Government support needed
The rare-earth industry has restated the need for government
support in order to develop diverse global supply chains that
will not leave the world dependent on China. Even though
rare-earth mines are springing up around the globe, facilities
for processing, separating and metal production remain heavily
concentrated in the East Asian nation. This concentration
leaves supply chains vulnerable to political tensions, with
fears growing that China could decide to choke-off rare-earth
Western rare-earth market participants called for
governments to step up and further support non-Chinese supply
chains at a webinar run by the Rare Earth Industry Association
in March 2020. "We need governments to step up and not wait
until there is a crisis… It’s time to act,"
Lloyd Kaiser, general manager at Australian rare earth junior
explorer Arafura, said.
Global rare-earth supply must be incentivized, David
Merriman, from analyst group Roskill, added.
Markets are still watching a shift in focus of the United
States government after the inauguration this year of Joe Biden
as the new US president.
Rod Eggert, professor at the Colorado School of Mines, said
there would be "a continued focus on technological solutions
[and] a continued focus on primarily relying on the market,"
but there would be "growing acceptance that industrial policy
has to play a bigger role" under the new administration.
"Despite the change in tone, there will be less change than one
might expect," Eggert said.
US takes lead in support
The change in US administration at the start of 2021 is
spurring fresh support for domestic rare-earth production, with
an increased focus on uses for energy rather than defense.
President Biden’s executive order on the
strengthening of American manufacturing, which he signed during
his first week in office, signaled wider support for domestic
production of a number of key minerals, including rare
"American manufacturing… must be part of the engine
of American prosperity now," Biden said. "We’ll
buy American products and support American jobs."
On this issue, there is continuity with the previous
administration’s interest in developing domestic
supply chains for a range of critical minerals. The US
government has stepped up support for domestic rare-earth
projects over fears that access to the critical minerals is, at
the moment, tightly controlled by Chinese producers.
With operations in Australia and Malaysia, rare-earth miner
and processor Lynas has announced government-backed plans to
develop light and heavy rare-earth processing capacity in the
US. "While demand for rare-earth materials continues to grow,
Covid-19 has exposed the risks within the global supply chains
of the single sourcing of critical materials," Lynas chief
executive Amanda Lacaze said in January 2021. The company plans
to locate both light and heavy rare-earth separation facilities
at the same site in the state of Texas.
Biden’s policies will also boost demand for
rare earths, with large-scale government support for wind power
and electric vehicles.
This transition to new energy will require increased
domestic mineral production, US Energy Secretary Jennifer
Granholm said on March 9. Granholm said that there would be
"huge demand" for sustainable mineral supply chains in the US,
both to serve the domestic electric vehicle (EV) industry and
to provide jobs for coal miners who may be affected by falling
demand for fossil fuels.
Granholm’s statement underlined growing US
policy support for domestic critical mineral production, which
has continued despite the change in administration.
On the demand side, there is now much more government
support. A key driver for this demand will be a massive
investment in wind power.
In the US, on March 29 this year, Biden announced a series
of measures to support this sector. These included the
announcement of a new wind energy area in the New York-New
Jersey Bight, an area of shallow water off the coast of New
The measures involve support from a number of government
agencies and include a target of 30 GW of offshore wind power
by 2030, with an ultimate target of 110 GW of wind power by
2050. Other parts of the proposal include $3 billion in loans
for wind projects and $230 million in funding for port
infrastructure to support the offshore wind industry.
The United Kingdom is another emerging center of
rare-earth demand, where wind power is being built at a rapid
pace. Wind turbines are a major driver of demand for magnet
rare earths, including neodymium, dysprosium and terbium.
On November 18, 2020, UK Prime Minister Boris Johnson laid
out a 10-point plan to invest in renewable resources. As part
of this plan, the government will invest £12 billion ($17
billion), and it suggested that this spending could spur at
least three times as much in private-sector investment by
Among the sectors to receive support is offshore wind.
Johnson restated a plan to quadruple wind power generation by
Additionally, the UK will end the sale of new petrol and
diesel cars and vans by 2030 – this will be 10 years
earlier than initially planned. To support this, there will be
£1.3 billion of investment in charge points and more
£1 billion of investment in subsidies for the purchase
of new electric vehicles and for battery production.
These investments would support demand for lithium, cobalt
and graphite, which are key battery raw materials.
This rise in UK rare-earth demand is sparking investment in
a UK rare-earth separation and magnet supply chain. In May
2021, Australian miner Peak Resources announced plans to build
the UK’s first rare earths refinery after taking
out a £1.85 million lease on a production site at Redcar
on the River Tees in North Yorkshire, England, taking advantage
of a Freeport system being introduced in the area.
Peak Resources currently operates the Ngulla Rare Earth
project in Tanzania, east Africa, which is expected to produce
32,700 tonnes of 45% purity rare-earth concentrate when fully
up and running. The company said that it will ship the
concentrate from Tanzania to Teesside.
Another rare-earth company, Pensana, has submitted a
planning application for a $125 million separation facility in
Saltend, near Hull, on the east coast of England. London-listed
Pensana is also developing a rare-earth mine at Longonjo in
Angola, which is intended to supply the Saltend plant.
In November 2020, UK-based Less Common Metals received
approval from Innovate UK, a non-government agency, to conduct
a feasibility study to identify the requirements to establish a
fully integrated supply chain for the production of rare-earth
permanent magnets in the UK.
Other new wind power projects are being announced across the
world, with governments striving to achieve the commitments of
the Paris Climate Agreement.
South Korean President Moon Jae-in unveiled plans on
February 5 for a $48.5 billion project to construct the
world’s largest wind power plant. The 8.2 GW plant
will be located off the coast of Sinan, southwest South Korea,
and is part of the country’s plans to hit a 16.5
GW target for wind energy by 2030, up from 1.7 GW now. Most of
the funding will come from engineering and energy companies,
with $814 million being provided by the government.
Also on February 5, Denmark announced plans to build an
artificial island in the North Sea to serve as the hub of a
network of 10 GW of offshore turbines. The plan will contribute
to the EU’s target of 200 GW of offshore wind
capacity by 2050.
In China, meanwhile, a new action plan on reaching carbon
neutrality was announced in March. China’s
wind-power development policy is gradually pivoting to offshore
wind power, with 3,060 MW of new offshore wind capacity
installed in 2020, which equates to more than half of global
offshore installation last year, according to the Global Wind
Local authorities in China are also supporting the drive.
The Guangdong provincial government, for example, plans to
support construction of 4,000 MW of offshore wind capacity by
the end of 2021, and 15,000 MW by the end of 2025.
Jiangsu province, which has the largest offshore wind
capacity in China, plans to install another 12.12 GW of
capacity by 2025. And the Shandong regional government has
announced plans to add capacity for 10 GW.
No supply crunch in sight
With demand booming, concerns continue to be raised, as they
have been for many years, about the dominant role that Chinese
state-owned enterprises play in global supply. But so far these
concerns have remained only theoretical, with little sign of
any appetite for restrictions on exports or production.
The Chinese government announced record-high rare-earth
output quotas for the first half of 2021. In a joint statement
released on February 19, China’s Ministry of
Industry & Information Technology and the Ministry of
Natural Resources said that the rare-earth ore mining quota
will be 84,000 tonnes for the six months to June, up by 27.2%
The quota of ore to be processed was also increased, to
81,000 tonnes for the first half of 2021, up by 27.6%
The announcement of the highest rare-earth production quotas
on record should calm fears of Chinese restrictions on
rare-earth supplies, which intensified in 2021 following
reports in western media that these were a possibility.
In January, the Chinese Ministry of Industry announced a
draft management rule for rare-earth exports, which would
include export and production quotas and other government
supervision, ostensibly to prevent any detrimental
environmental effects of unrestricted rare-earth
Market sources in China’s rare-earth sector
have reported that there have been continued shipments of
material from Myanmar, with no disruptions resulting from the
recent military coup in the country and the subsequent waves of
On February 1, the military of Myanmar took power in a coup,
which displaced the elected administration and has sparked
continuing protests and political violence. This situation has
raised fears for the supplies of rare-earth ore to China,
specifically the ionic clay that is used to produce heavy rare
earths such as dysprosium and terbium. About half of
China’s feedstock of heavy rare earths comes from
China imported a total of 8,714 tonnes of mixed rare-earth
carbonate in the full year of 2020. Imports from Myanmar
accounted for 71.4% of this, at 6,225 tonnes.
But Chinese rare-earth industry participants told
Fastmarkets that they have not yet seen any significant delays
to deliveries. Myanmar’s rare-earth mines are
mostly in the north of country, in areas that are not yet being
affected by the political unrest.
The border with China is porous, and illegally mined Chinese
ore is sometimes smuggled into Myanmar and then reimported for
processing in China. Myanmar does not publish detailed export
statistics for rare earths.
In April this year, Lynas noted that Chinese exports are
likely to increase in the near term. Lynas said that Chinese
market participants are anticipating this growth and several
suppliers have announced production capacity increases. Among
those is the doubling of production within three years by
Northern Rare Earth, China’s leading rare earths