Name: Rare Earth Elements - Used in electronics, magnets, and renewable energy technologies
SKU: 825
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Rare Earth Elements – Used in electronics, magnets, and renewable energy technologies

£48,500.00

Understanding Future Demand

The history and present state of the REE supply chain exhibits the important role these materials already play in the world economy. Projections of a sharp increase in demand over the coming decades raise several questions about the future environmental impacts and supply risks to this industry. A 2012 MIT study by Alonso et al. thoroughly explores this question of future supply, and projects total global demand out to 2035 under five divergent scenarios.

One of these scenarios uses the IEA Blue Map scenario to estimate future wind and automotive electrification (IEA 2010). This model only seeks to reduce global carbon emissions by 50% by 2050. Given our understanding of climate sensitivities in 2021, these projections should be considered far too limited to reach global emissions targets. They provide us with a conservative estimate of demand for the purpose of this analysis (IPCC 2018).

Under this scenario the study projects that by 2035 global demand for REEs will reach close to 450,000 tons per year, compared to approximately 200,000 tons per year today (USGS 2021). This represents more than a doubling in the size of the industry in just 15 years, which is again overly conservative according to present day decarbonization targets.

Furthermore, the rate of demand growth in Alonso et al. accelerates rapidly, as do projections of wind turbine and EV production out to 2050, indicating that this increase in industry demand is only the beginning of a pattern of accelerating growth that will likely last for decades (Larson et al., 2020).

As technology advances and demand for clean energy solutions intensifies, overall production of REEs will have to scale to accommodate growing demand for only a small handful of elements needed for magnets—specifically neodymium (Nd) and dysprosium (Dy). Whereas Alonso et al. predicts that 2035 demand for yttrium (Y) and terbium (Tb) will only be approximately 250% of 2010 supply, 2035 demand for Dy will be over 2500% the supply of Dy in 2010.

REEs are typically co-located in small concentrations, so global mine operations may need to produce a significant excess of many lesser-used elements to produce sufficient Dy. This effort to match production of elements to their relative demand is called mine yield balancing and promises to be a growing challenge in the REE industry. Industrial use of REEs is a relatively recent economic development and uses for these elements developed to accommodate their natural abundance and take advantage of low market prices.

It is, therefore, uncertain how the global market will respond to the excess supply and lower prices of REEs not used for magnet production, since uses for many other REEs are still limited. Because production of these minerals is almost always complementary, market demand for each element is important to consider in investment and operational decision-making.

If insufficient demand for these other elements emerges, it could significantly increase the long-term cost of critical elements such as neodymium and dysprosium. For emerging and sustainable energy solutions to effectively utilize rare earth elements, a higher premium for these materials will likely be necessary.

Description

Abstract

From an engineering approach, rare earth elements (REE) have the extra potential to modify modern engineering in an extraordinary way. Their peculiar optical, mechanical, electronic, and magnetic properties have been used for years and even open up wider possibilities for using rare earth elements. With advances in all fields of engineering, it is predictable that the rare earth elements will play a crucial role. The use of the rare earth elements permits many new advances, including digital and magnetic technologies operating at reduced energy consumption, higher efficiency, miniaturization, speed, and durability. The REEs are particularly crucial components in clean energy applications, which is especially important in the fight against global warming. For these reasons, the rare earth elements will become essential components in the technological revolution in the second quarter of the twenty-first century.

What Are Rare Earth Elements?

Historically, REEs have primarily been utilized in industrial processes for their catalytic properties. They are essential to the petrochemical industry in breaking down large molecules into smaller hydrocarbons suitable for use in fuels (Akah 2017). Recently, the demand for REEs has dramatically increased due to the permanent magneticity that is exhibited by their alloys (See Figure 1).

Alloys of neodymium (Nd) and samarium (Sm) are strong magnets that can withstand relatively high temperatures, making them ideal for a wide variety of electronics and defense applications. The strongest known magnet is an alloy of neodymium with iron (Fe) and boron (B), abbreviated NdFeB. Other REEs such as dysprosium (Dy) and praseodymium (Pr) can be added to NdFeB to change the performance properties of these magnets (Constantinides 2012).

The clean energy technologies sector is expected to increase demand for REEs considerably, because strong magnets are critical in the construction of direct drive wind turbines and permanent magnet motors for electric vehicles (DOE 2019; Hanejko 2020).

Direct drive wind turbines currently make up a small fraction of the total wind energy capacity in the United States. However, their high efficiency and relatively low maintenance requirements compared to other turbine technologies have put direct drive wind turbines in consideration for large-scale offshore wind installations.

Similarly, motors containing REE permanent magnets have recently become the standard choice for electric vehicles due to their high efficiencies. With the growing need to forgo fossil fuels, the demand for REEs from the wind and electric vehicle industries is projected to increase in the near future (Alonso et al., 2012).

What impact this might have on price is open to debate and will be further explored throughout this digest. Over the last decade, for example, despite increasing demand, prices have remained relatively stable because of cheap Chinese production (Bloomberg 2021).