Elementary Essentials
Rare earths are used in a wide variety of markets, but primarily in highly developed technologies such as electric vehicles, renewable power, consumer electronics, batteries, nuclear control rods, data storage, and x-ray machines. Some rare earths are also used as alloys for stainless steel or other advanced alloys.
As a result of primary end uses, the largest importers of rare earths, other than cerium, are the US (20%), China (18%), Philippines (12%), Vietnam (10%), Japan (9.7%) and Germany (9.6%). The consumption of rare earths has grown roughly 3.9% annually since 2015, and accelerated despite the Covid-19 pandemic, to 5% in 2020.
Once domestic production is accounted for, China maintains a commanding share of total rare earth consumption, at roughly 70% of the global total. Approximately 30% of China's production is magnets, and another roughly 25% is in catalysts or polishing powders. Japan and Asia (Vietnam and South Korea most notably) lean towards a more even distribution and focus on value-add products, while the rest of the world makes almost no permanent magnets.
Looking ahead, a large sector of the growth market for rare earths is in magnetic products as renewables and electric vehicles rely heavily on permanent magnets for electrification of infrastructure. Historically, the rare earths market is volatile with fluctuations in over or under-supply, export restrictions and quotas, but increasingly rare earth products used for magnetisation are being declared 'critical minerals' and nations are making moves toward securing long-term support for the market to reduce volatility.
Significant upside risk remains for magnetic elements, like neodymium and praseodymium, as the energy transition gains momentum and can expect long-term market deficits, with demand growing up to 35% out to 2030. Prices will continue to grow steadily for these elements as a supply crunch begins to restrict supply, and markets may be forced to use more expensive rare earth alternatives such as Terbium, which had an over US$900/kg price premium at the end of 2020.