Rare Earth Metal Market

The government initiatives towards rare earth metals are projected to boost the demand for rare earth metals during the forecast period. Increasing usage of rare earth metals in magnets is expected to drive the global rare earth metals market in the coming years.

The surge in demand for electric vehicles is projected to create lucrative opportunities for the players operating in the global rare earth metals market. However, fluctuating raw material prices are expected to hamper the global rare earth metals market.

Rare earth metals are in high demand across a variety of end-use sectors due to their comprehensive qualities, such as high quality and distinctive traits. The rare-earth elements (REEs) were previously only known to a very restricted group of individuals, including chemists, geologists, specialists in the field of materials science, and engineers.

Policies such as the Multilateral Minerals Security Partnership (MSP) were launched in June 2022 with the intention of uniting nations to create the strong key mineral supply chains required for achieving climate goals. The US, Canada, Australia, the Republic of Korea, Japan, and several European nations are involved in this alliance.

Under The ONSHORE Manufacturing Act, the US government is a program for financial investments inside the US Department of Energy to offer financial support to commercial organizations primarily for the development of rare earth metallurgical/manufacturing facilities, where finished goods are created. It establishes a multilateral investment fund for the Secretary of State to work with US allies to create safe global supply chains for rare earth. Instructs the US Department of Labor (DOL) to launch a workforce development strategy to support education and training programs for all phases of the manufacturing of rare earth. It also directs the President to submit a plan of action for expanding domestic product production and the development of technologies under the Defense Production Act, in consultation with appropriate government agency heads and industry stakeholders. Prohibits "foreign entities of concern," such as those owned, controlled, or influenced by the DPRK, PRC, Russia, or Iran, as well as those thought to be engaging in behavior injurious to the national security or foreign policy of the US, from obtaining cash under the program. includes a clause allowing DOE to withhold payments from a recipient if they collaborate on research projects or exchange intellectual property with a problematic foreign firm.

Additionally, in India, to lessen India's reliance on imports of rare earth minerals from China, the Confederation of Indian Industry (CII) has asked the government to promote private mining in the sector and diversify supply sources. India barely generates 1% of the world's supply of rare earth while having 6% of the global deposits; China meets the majority of India's needs for these minerals. A professional "India Rare Earths Mission," similar to the India Semiconductor Mission, was recommended by CII as an essential part of the Deep Ocean Mission. Furthermore, the business group has suggested that rare earth minerals be incorporated into the "Make in India" campaign, citing China's "Made in China 2025" plan, which emphasizes the use of novel materials, such as permanent magnets made of rare earth minerals. Indian exploration has been done by the Bureau of Mines and the Department of Atomic Energy. Formerly known as Indian Rare Earths Limited, IREL (India) Ltd is a public sector organization that reports to the Department of Atomic Energy. Mining and processing were once done by a few insignificant private players. Monazite beach sand, which is found in many coastal states and is the principal mineral that includes REEs, has been given a monopoly in India by government businesses like IREL. The Department of Energy is to get thorium produced from monazite from IREL. Moreover, The Mines and Minerals (Development and Regulation) Amendment Act, 2021 was passed by the Ministry of Mines to amend the Mines and Minerals (Development and Regulation) (MMDR) Act of 1957 in order to boost mineral production, make doing business in the nation easier, and increase the contribution of mineral production to GDP (GDP).

Therefore, due to government initiatives for rare earth metals as mentioned above and many more policies are likely to drive the market in the forecast period and boost the demand for rare earth metals due to their extensive application in various end-use industries.

Battery-powered electric vehicles (EVs) are propelled by an electric motor rather than an internal combustion engine. A massive traction battery pack provides the power to run the electric motor. The electric motor must be extremely efficient in order to conserve and maximize battery life. Magnets are an essential component of electric motors. A motor works by spinning a coil of wire surrounded by powerful magnets. The induced electric current in the coil produces a magnetic field that opposes the magnetic field produced by the powerful magnets. This produces a repellent effect, similar to putting two north-pole magnets adjacent to each other. Depending on the design, the average hybrid or electric car consumes between 2 and 5 kg of Rare Earth magnets. Rare earth magnets can be found in HVAC systems (heating, ventilation, and air conditioning); steering, gearbox, and brakes; engine hybrid or electric motor section, sensors for security, seating, cameras, and so on; windows and doors; system of entertainment (speakers, radio, etc.); batteries for electric vehicles hybrid fuel and exhaust systems. To compete with the typical passenger Internal Combustion Engine Vehicle in terms of performance, the average passenger Electric Vehicle would require 2 kg of rare-earth permanent magnets in its drivetrain motor. This is a breakdown of the most often utilized rare earth in the 2-kilogram number of rare-earth permanent magnets required for usage in the typical Electric Vehicle: 21% Neodymium, 7% Praseodymium, 2% Dysprosium, 1.5% Terbium, 31.5% Total Rare Earth needed per kilogram of the magnet.

According to Rare Earth Industry Association (REIA), to meet the EU's aim of 30 million EVs manufactured and utilized by 2030, there is a cumulative requirement of about 60,000mt of rare earth magnet 19,000mt of which is rare earth for European EV producers alone. According to Argonne National Laboratory, the average single automobile lithium-ion battery pack (of the NMC532 type) can contain roughly 8 kg of lithium, 35 kg of nickel, 20 kg of manganese, and 14 kg of cobalt. If rare earth permanent magnets are not used in EV drivetrain motors due to the EU's lack of adequate industrial policy intervention to establish domestic midstream and downstream, a 30% larger battery pack would require 72,000mt more lithium, 315,000mt more nickel, 180,000mt more manganese, and 126,000mt more cobalt by 2030 alone. None of these key minerals for batteries are (or will be) in sufficient supply by 2030 to meet the target demand - even if costs continue to rise. EVs will become so uneconomical that even consumer incentives will be unable to build momentum for their adoption.

The electric vehicle (EV) market has experienced tremendous growth in recent years and is expected to continue in the forecast period. The development of Fuel Cell Electric Vehicles (FCEVs) represents a significant advancement in the automobile industry. This is projected to improve EV demand and manufacturing in the near future. International agreements and conferences, such as the Kyoto Protocol, the Montreal Protocol, and the Paris Agreement, are establishing enforceable measures to reduce pollution globally. This regulatory trend is predicted to continue in the future, fuelling e-mobility, which is expected to account for 30% of total automotive production.

Hence, increasing demand for electric vehicles and various aims by manufacturers for EVs is likely to create lucrative opportunities for global rare earth metal market in the forecast period.

Even though China is the world's largest supplier of rare earth resources, it lacks the ability to set prices on the global market. As a result, countries like the US, Japan, and others buy and store a lot of rare earth products at extremely low prices. Due to the enormous demand increase, supply constraints, geopolitical risk, and market disruptions, REM prices have fluctuated greatly in recent years and are predicted to continue to do so. Due to a supply and demand mismatch in the Chinese market for rare earth raw materials, which is a result of "double carbon," prices for praseodymium and neodymium have increased significantly since Q2 of last year. The growth of downstream sectors may be hampered by the imbalance between the supply and demand of rare earth.

The demand for permanent magnet materials spikes along with the fast growth of downstream new energy vehicles and wind power, driving up costs for rare earth elements like praseodymium, neodymium, terbium, and dysprosium. Rare earth elements are not sold on any market like other metals. Since they are primarily offered in private marketplaces, it is challenging to monitor and regulate their prices. The rare-earth metals industry cannot expand due to fluctuating raw material prices.

The volatile price of rare earth metals does not depend only on costs, but also those of using them, such as re-engineering components and systems as well as manufacturing; along with performance, that is, the characteristics of the materials and systems that use a rare-earth element. Costs change as a result of new market conditions and of new technologies adopted by the market. Hence fluctuating raw material prices may restraint the growth of global rare earth metals market in the forecast period.

China has also used REEs to exert pressure on other countries, blocking REE exports to Japan in 2010 as retaliation for Japan's imprisonment of a Chinese captain. Recently, it discussed restricting REE shipments to the United States in reaction to tariffs imposed.

Because of low environmental restrictions, China was able to acquire such supremacy in the REE business. Low-cost, high-pollution technologies let China outperform competitors and establish a solid footing in the worldwide REE industry. This market is currently booming: China increased its output by more than 27 percent in the first half of 2021, reaching historic levels of REE extraction as demand rises. The most infamous mine in China is Bayan-Obo, the world's biggest REE mine. The tailing pond formed by the mine is perhaps more infamous than the mine itself: about 70,000 tons of radioactive thorium are stored in the vicinity. Because the tailing pond lacks suitable lining, this has suddenly become a bigger concern. As a result, its contents have leaked into groundwater and will soon reach the Yellow River, a critical supply of drinking water. The sludge is currently traveling at a dangerously fast rate of 20-30 meters per year. There are several such examples of dangerous mines throughout China. The settlement of Lingbeizhen in Southern Jiangxi province features open-air leaching ponds and wastewater pools. When harmful chemicals are left unmonitored and susceptible to the vagaries of nature, it is simple to envisage them flowing into groundwater or streams. Another mine produced so much effluent that China had to construct a treatment plant capable of cleaning 40,000 tons of wastewater per day before allowing the water to flow back into the river.

Notwithstanding its claims of progressive change in REE mining, China recognizes the significance of its monopoly and wishes to retain the status quo. Instead of exposing its inhabitants at home to the hazards of REE mining, China appears to be shifting its activities to Africa, where it may poison foreign communities. While some of these activities are carried out by private businesses, the six major mining corporations are all state-owned. In exchange for infrastructure, China has obtained exclusive rights to REE reserves in a few African nations. For example, in exchange for developing national roads, highways, and hospitals, China gained the rights to lithium mining in the Democratic Republic of the Congo. Similarly, China acquired commercial licenses for REE mining in Kenya by pledging to build a data center worth $666 million. Additional transactions are emerging in Cameroon, Angola, Tanzania, and elsewhere. But African states have accepted these accords for the time being, some are concerned that this is a long-term strategy by China to trap African nations in a debt cycle. To counteract Chinese influence, the United States has revived some of its earlier REE mining operations around the country. In the case of a wider confrontation, the administration wants to ensure that important American businesses may remain apart from China. Fortunately, the United States has more stronger environmental rules in place for its REE mining, albeit its techniques are far from ideal.

Thus, the China’s dominance in the market might hinder the growth in the global rare earth metals market.