The rare earths boom catapults its price: from the bottom of the periodic table to a key piece to change the world

It is estimated that the demand for rare earths will skyrocket 300% in 2030

Rare earths have been giving people talk for some time, however, in recent months their prominence has reached unsuspected heights. These minerals are a key piece in the economic transformation that has gained speed after the emergence of the Covid-19 pandemic, which has doubled in price since 2020 and that may be just the beginning.

Rare earths are used to make the motors of electric cars, 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 today are also in short supply for similar reasons . To make matters worse, China accounts for around 70% of rare earth production, which creates even more tension and instability in the market.

To better understand this world, it is interesting to make a very summary summary about these minerals. Rare earths appear in the form of oxides, have magnetic properties (among others), and are largely the lanthanide family (not all).

On the one hand there are scandium and yttrium (they are not lanthanides), and then the 15 elements of the group of lanthanides, 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 biggest boom to date: neodymium and praseodymium (Nd-Pr) .

The demand has no ceiling

From the Swiss investment bank UBS 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 in price in the coming years. To meet the rare earth demand of electric vehicles, which require roughly five times more rare earth material than combustion engine vehicles, the supply of NdPr should triple by 2030.

“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 more valuable (they account for 20% of volume, but 80-90% of industry revenue). Small amounts of various elements are used in defense and strategically important applications, “explains the UBS note.

In this way, the Swiss bank expects that the demand for NdPr will skyrocket 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, using about 200 kg of NdPr. | How to invest in rare earths?

China currently produces 70% of the world’s rare earth supply ( before 1990, the US dominated production ), while Australia’s Lynas and American MP Materials produce another 15% each. However, UBS assures 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, driven primarily by limits on supply and some pickup in demand. “We forecast prices for NdPr to go from 60 dollars per kilo to 100 dollars per kilo in 2024,” they say from the Swiss bank.

The situation is complex. In addition to supply problems and sharp price rises, China can use its production power as a weapon 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 China could limit the supply of these minerals to companies in Europe and the United States , which can generate important bottlenecks in the production chains of many goods, but especially those related to the achievement of a more sustainable world.

FAO's Food Index hits 10-year highs Amid inflationary fears, the UN Food and Agriculture agency, FAO, has issued a serious Read more

Spain, Italy, France and Germany defend a minimum universal tax of 15% on companies after the US proposal before the Read more

If the central bank does not act, private money could interfere with monetary policy The rapid digitization of payment methods Read more

The US central bank underlines "progress in vaccination and strong political support" to sustain the recovery. The US Federal Reserve (Fed) Read more

BofA experts believe the market could get nervous if the ECB does not show its policy roadmap very clearly The Read more

275 billion euros in their risk assets Big euro area banks have been declaring a deficit of 275 billion euros Read more

A situation fostered by accommodative policies and the overvaluation of multiple assets The still ongoing pandemic has required a war Read more

The Paris Agreement is an agreement on climate change mitigation, adaptation, and finance, signed in 2016 Good news for the weather. After the controversial decision of Read more

Fed officials, determined to restore the job market and push inflation to 2% on a persistent basis

 Fed officials, determined to restore the job market and push inflation to 2% on a persistent basis In the face of a suffering Read more

Treasury Market's Bets on 2021 Reflation Face January  Yields on 10-year U.S. Treasuries surpassed 1.26% on Tuesday for the first Read more

Leave a Reply