Rare earth metals have become indispensable components in modern technology, from electric motors in cars to speakers in homes. Rare earths metals can be found practically everywhere imaginable and it would be hard to imagine any device without using them in some capacity.
China's monopoly of rare earth mineral production is giving some investors cause for alarm, and there's little room for complacency as governments redouble efforts to speed energy transition.
Rare earth elements are essential components for many forms of green energy technology, such as wind turbines and electric vehicles, with demand set to increase significantly as more countries diversify away from China for supplies of these minerals.
Future Market Insights estimates that rare earth elements will experience an approximate 10% annual increase from 2023-2033, as reported by their research firm Future Market Insights. This rise can be attributed to their use in renewable energy systems such as electric vehicles (EV) or other forms of renewable energy that utilize neodymium-iron-boron magnets to decrease circuit sizes, leading to decreased circuit sizes requiring reduced circuit sizes for better efficiency and power production.
Asia Pacific region is projected to account for more than 55% of global rare earth mineral demand by 2018. Furthermore, their market is likely to expand further in developing nations like India and Vietnam which have among the fastest-growing electricity generation rates. Furthermore, electric vehicle production requires smaller circuits requiring rare earth elements which allow production using less components compared with traditional automobiles.
Rare earth elements are used to improve motor efficiency by reducing moving part weight, and are also used in batteries used by electric cars - providing longer range than other types. They have also found use in wind turbine production because these metals can produce lighter, stronger blades.
Renewable energy and automotive industries may be driving demand for rare earth metals, but other sectors are looking for reliable sources. One such sector is aerospace and defense - this sector uses rare earths in radar systems as well as aluminum alloys used to make fighter jets.
As technology has advanced, rare earth metal demand has skyrocketed. They are used in computer processors, batteries for hybrid cars and other high-tech equipment. When supplies of rare elements became limited, prices skyrocketed, prompting companies to scramble for solutions - some seemingly ridiculous like opening the Amazon rainforest up for mining or raking the sea floor; other initiatives required significant investments like reopening Molycorp's Mountain Pass Mine in California or building a plant to separate rare earths from mineral ores using advanced chemical processes.
China now controls most production of rare earth metals from mining through processing to manufacturing, thanks to their competitive edge in rare earths production and their ability to control supply chain operations - effectively giving them a virtual monopoly position in this vital industry.
Light rare earths (Sc, Y and La-Lu) are relatively plentiful on Earth's crust (cerium is even more prevalent than copper!), yet their abundance is spread thin due to trace impurities making processing into usable forms more challenging than before. Current production methods require large amounts of ore and generate harmful waste products.
At times, these expensive processes tend to drive up mining and processing costs beyond their economies of scale, making it hard for competing producers to break even. This has resulted in a rare earths boom as more individuals and companies realize they must source these minerals more sustainably.
New developments could soon offer hope in solving the supply chain puzzle for these rare elements. One promising method of chemical separation for rare earths developed by scientists from Oak Ridge and Idaho National Laboratories as part of the Department of Energy's Critical Materials Institute could drastically cut processing costs; its liquid based system allows multiple metals to be separated without complicated and costly chemistry being necessary for separation.
Ultimately, this could significantly transform the US rare metal industry for producers living here. If successful, research may lead to it becoming one of the primary suppliers for rare metals in this country for the first time ever.
As nations worldwide seek to replace fossil fuels with alternative energies, the green energy movement has taken off rapidly. Investors can profit from companies producing technologies required for this transition. Direct investing may not provide sufficient diversification; investing in green energy funds provides access to a diversified portfolio of renewable and other alternative energies investments.
Solar power has emerged as a popular green technology and its cost is falling rapidly across many nations, particularly Africa, says Annika Brouwer of global investment manager Ninety One's Sustainability Team. According to her, its potential is particularly exciting. She noted how fast its prices were falling that it had become cost-effective way for developing nations to expand capacity via adding solar PV, according to Annika.
Other green energy sources include wind and hydropower; while wind can be generated in various locations, while hydropower requires significant water infrastructure in order to access its resources.
Biomass energy can be harnessed for electricity production, heating and cooling of buildings and vehicle power. Wood, plant waste and energy crops can all be burned to generate steam that drives turbines connected to generators for efficient power. Geothermal power harnesses thermal energy stored beneath Earth's crust that can then be harnessed for electricity generation or hot water production without emitting greenhouse gasses or needing new forests cleared or coal mined - another plus point!
Rare earth elements have seen their use exponentially increase with global demand for advanced technology and green energy increasing. But as society strives towards sustainability, we need to ensure the production of these important materials adheres to ethical standards by restricting demand while encouraging producers to adopt environmentally-friendly processes.
China currently accounts for most of the global rare earth production. This is because separating and refining REE metals requires expensive, complex machinery which is only readily available in countries with robust mining sectors. Permanent magnet production accounts for much of this demand - an essential component in building cell phones, TVs, computers, jet aircraft, wind turbines and many other modern technologies.
Dependence on a single supplier can be unsettling for some nations. Russia's invasion of Ukraine has made some governments warier of relying solely on one regime to fulfill their technology needs, while recent global economic slowdown has raised new worries regarding potential impacts from such an exclusive supplier on global economic health.
East Star Resources and others have begun making strides to diversify their supply chains, investing in new mining projects outside China and even using microbial fermentation technology to extract rare earths from polluting leaching ponds that would otherwise cause environmental pollution.
These methods of mining are significantly more eco-friendly than traditional techniques and could provide the only sustainable means of meeting rising demand for rare earths. Current mining methods require using toxic chemicals which then get dumped into ponds which pollute groundwater supplies - causing pollution that's out of control in less developed nations.
The AfCFTA could help address this problem by ensuring African countries benefit from value addition prior to exporting rare earths. While this process is costly and will be hard for individual nations to implement without continental separation plants, with help from AfCFTA enabling African countries to increase exports; ultimately leading to stronger economies and providing essential resources that society requires for sustainable development.