Rare Earth Elements (REE)

While we are all familiar with the more common elements and their uses, such as gold, copper and iron, rare earths are also used in our daily lives - it’s just that we don’t hear about them very often.  Rare Earths in fact are not all that rare - they make up nearly 25% of non-ferrous metals in the earth’s crust. However, they are rare in the sense that concentrations of rare earths in mineable economic concentrations are very rare.

What Are Rare Earth Elements?

Rare Earth Elements (REEs) are a group of specialty metals with unique physical, chemical and light-emitting properties that are seeing dramatic increases in demand, owing to their technological applications.

REE’s  consist of 15elements.  In most cases and usage patterns in the modern economy, these 15 elements are oxides (often shown as Total Rare Earth Oxides or TREO).  The names of the elements are Cerium, Dysprosium, Erbium, Europium, Gadolinium, Holmium, Lanthanum, Lutetium, Neodymium, Praseodymium, Samarium, Terbium, Thulium, Ytterbium, and Yttrium.

Uses of Rare Earth Elements

REE’s are essential components to products with significant growth potential in the markets associated with the electronics and technology industries, energy efficiency and greenhouse gas reduction.  As a key component in re-chargeable batteries and the magnets in electric motors, rare earths will play a fundamental role in hybrid motor vehicles such as the Toyota Prius.

REE’s are critical and strategic components in many high-technology developments.  REE’s are also key products in the electronics market, including mobile phones, laptop computers, plasma and LCD display screens.

The diverse nuclear, chemical, metallurgical, catalytic, electrical, magnetic and optical properties of the REE’s have led to an ever increasing variety of applications and demands (see chart below).

Supply and Demand

China supplies approximately 92% of the world’s supply of Rare Earth Oxides (“REO”).  China and has recently recognized that its REO sources of supply are finite and owing to the importance of REE availability to internal industries, China is prioritizing its domestic markets through steadily increasing export taxes on REE’s in conjunction with reducing export quotas.

A number of countries including the U.S.A., Japan and South Korea have expressed their concerns over the concentration of REO supply currently with China.

The following is an expert from a report in TechNewsDaily on 14 April 2010 regarding U.S. concerns over dependency on REO imports from China.

“U.S. military technologies such as guided bombs and night vision rely heavily upon rare earth elements supplied by China, and rebuilding an independent U.S. supply chain to wean the country off that foreign dependency could take up to 15 years, according to a new report by the U.S. Government Accountability Office (GAO).

Military officials did stress how rare earth elements form a currently irreplaceable part of devices such as lasers, radar, missile-guidance systems, satellites and aircraft electronics. And many military systems also rely upon commercial computer hard drives that use rare earth magnets.

Even more specific examples of rare earth-driven technologies include the navigation system for the M1A2 Abrams battle tank, and a new hybrid electric drive in the works for the Navy's DDG-51 destroyers.

Rare earth elements might eventually become part of the U.S. National Defense Stockpile, according to the GAO report.”

Mine production has remained relatively static over the past 5 years at around 120,000 tonnes of REO, whilst demand has increased at between 8%-13% p.a. after the technology bubble of 2001-2.  In 2008, demand for REO was estimated to be 132,500 tonnes, valued at US$1.75 billion.

Forecast demand in 2012 for TREO is 190,000 tonnes with europium, terbium, dysprosium and yttrium expected to be in short supply.  Future TREO demand is forecast to increase between 8%-11% through to 2014 with the big consumers being China, Japan and the U.S.A.. (Source: IMCOA)

Prices for rare earth carbonates are determined by the concentrations of the individual rare earth minerals in the concentrate. REO’s are not LME traded commodities and as such a terminal market is not present.  Prices are dictated by the usual factors of supply and demand with IMCOA forecasting prices of US$7.50 to US$10/kg over the period to 2014.