Rare earths have been talking for some time, however in recent months their prominence is reaching unsuspected heights. These minerals are a key piece behind the outbreak of the covid-19 pandemic, which has doubled its price since 2020 and that may only be the beginning.
Rare earths are used to make electric car motors, wind turbines and dozens of sophisticated devices that require one or more of the seventeen elements that make up rare earths in the periodic table. These minerals are also used in the manufacture of chips, which To make matters worse, China monopolizes around 70% of the production of rare earths, which generates even more tension and instability in the market.
To better understand this world, it is interesting to make a very brief summary of these minerals. Rare earths appear in the form of oxides, have magnetic properties (among others) and are largely (not all) of the lanthanide family, which appear in a breakdown at the bottom of the periodic table.
The periodic table with the fifteen lanthanides indicated (including Nd and Pr)
On the one hand there are scandium and yttrium (they are not lanthanides), and then the 15 elements of the lanthanide group, which are lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium , erbium, thulium, ytterbium and lutetium. Two of these elements are experiencing the greatest boom to date: neodymium and praseodymium (Nd-Pr).
The demand has no ceiling
From the Swiss investment bank UBS they forecast in a report published this Wednesday a spectacular increase in the demand for rare earths, especially for neodymium and praseodymium (commonly marketed as NdPr), which could double their price in the coming years. To meet the demand for rare earths from electric vehicles, which require about five times more rare earth material than combustion engine vehicles, the supply of NdPr would need to triple by 2030.
The price of the most valuable rare earth minerals has skyrocketed
“Rare earths are a term used for the 17 chemical elements that are used in small amounts in a wide variety of industrial and technological applications…Neodymium (Nd) and praseodymium (Pr) (used in magnets) are currently the most valuable (they account for 20% of the volume, but between 80-90% of the industry’s revenue). Small amounts of various elements are used in defense and strategically important applications,” explains the UBS note.
In this way, from the Swiss bank they expect the demand for NdPr to skyrocket by 300% by 2030, driven by the consumption of electric vehicles (an electric vehicle generally has 1-2 kg of NdPr in its engine) and wind turbines, that use about 200 kg of NdPr. |
China currently produces 70% of the world’s rare earth supply (), while Australia’s Lynas and America’s MP Materials produce another 15% each. However, from UBS it ensures that China currently processes 90% of the entire supply, since the treatment of these minerals is expensive and highly polluting, so developed countries are not usually willing to perform this function.
For now, NdPr prices have doubled since mid-2020 mainly driven by limits on supply and some pick-up in demand. “We forecast that the price of NdPr will go from 60 dollars per kilo to 100 dollars per kilo in 2024,” they maintain from the Swiss bank.
The situation is complex. In addition to supply problems and sharp price increases, China can use its production power as a missile in any geopolitical or commercial dispute. Right now, much of the ‘green revolution’ depends on these rare earths.
Recently, the Financial Times newspaper leaked that , which can generate significant bottlenecks in the production chains of many goods, but especially those related to achieving a more sustainable world.
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