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.