Building sources of rare earths supply

Published: Tuesday, 12 October 2021

With rare earth prices climbing on fresh demand from the new-energy sector and the potential for future Chinese supply constraints, governments outside China are supporting new sources of supply, William Clarke reports.

Of the 17 rare earth metals, the fastest price rises have been seen in the magnet metals neodymium, praseodymium, terbium and dysprosium. Rare earth magnets are key ingredients in two of the fastest growing markets in the world – wind power and electric vehicles. Using a rare earth magnet in an electric motor makes a lighter, cheaper, longer range vehicle, and only rare earth magnets have the strength and heat resistance needed for application in wind turbines.

According to Lynas Rare Earths, a major producer, the average price of NdPr, the main rare earth component of magnets in China, was $69.90 per kg in the second quarter of 2021, compared with $40.80 per kg a year earlier.

The potential shortage of such a key element of new-energy technology is spurring governments to support new sources of supply. Lynas, an Australian company, has been selling rare earth oxide from its plant in Malaysia since 2012. It is one of the only non-Chinese companies with significant refining experience and it has agreements with the US government in order to bring light and heavy rare earth capacity to the United States.

In another development, new legislation has been introduced in the US to provide tax credits for rare earth magnet production in the country. The bill, introduced in the US House of Representatives on August 10, will provide a $20 per kg tax rebate for neodymium-iron-boron magnet production in the US. The tax rebate will rise to $30 per kg for magnets produced from US-mined rare earths. Representative Eric Swalwell, who introduced the bill, said that the measure would support the supply chains for US electric vehicle production.

"As the administration [under US President Joe Biden] makes a strong commitment to vehicle electrification, it’s more important than ever that the United States secures all of the necessary components of the supply chain," Swalwell said.

Wind turbines  

Wind turbines are one of numerous green-energy applications dependent on rare earths for their components

EU support too

The EU has also proposed new funding for the sector. On September 30, 2021, the European Raw Materials Alliance, set up by the EU in 2020, called for a mixture of government support and sales quotas to unlock around €1.7 billion of total investment in the rare earth sector.

"The commission’s in-depth review of critical supply chains and key technologies has highlighted the EU’s high level of foreign dependency on inputs required for our green and digital transition," Thierry Breton, EU commissioner for the internal market, said. "The EU depends on others – mainly China – for the import of permanent magnets, as well as the rare earth elements they are made of."

The report called for both the construction of rare earth refining and recycling capacity in the EU, as well as with resource-rich countries.

The growth in the rare earth market is opening up miners to new sources of the material. There is increased interest in the monazite fraction of rare earth deposits in particular. Monazite is found in abundance in the heavy sand deposits mined for titanium ores, but its natural radioactivity has historically made it too expensive to handle. As rare earth prices rise, however, the cost calculation has shifted.

Iluka, one of the largest titanium ore producers, has already started to exploit monazite tailings, and has unveiled plans to expand further in the rare earth sector. In May 2021, the Australian government announced that it will back a new rare earths processing facility to be built by Iluka.

The plant is planned to be located at Iluka’s existing mineral sand facility in Eneabba, Western Australia.

"The Morrison government is focused on growing Australia’s critical minerals sector, capturing more value from our resources by moving into downstream processing, and diversifying global supply chains," the government said in a letter to the Australian stock exchange. "This includes supporting Australian projects with broader benefits across the industry," trade minister Dan Tehan and resources minister Keith Pitt said in the letter.

Meanwhile, Energy Fuels, a long-standing uranium refiner, which has made a swift entry into the rare earths sector by purchasing monazite and processing it at its uranium facilities in the US, is planning to increase production there.