According to a new IHS Chemical global market research report, a growing global dependence upon a multitude of diverse technologies – from lighting systems to windpower turbines – has left manufacturers and countries vulnerable to the availability and uninterrupted supply (largely from China) of some key elements used to produce these technologies called rare earths.
In the report, the IHS Chemical CEH Rare Earth Minerals and Products Report, production and consumption of these industrial minerals in 2012 was more than 100 thousand metric tons (KMT). During the study period of 2012 to 2017, IHS estimates average global demand for rare earth products will grow by 7.6% annually, reaching more than 150 KMT of consumption, with China leading consumption growth at 8.3% annually.
Rare earths are a set of 17 chemical elements in the periodic table, more specifically, the 15 lanthanides, plus scandium and yttrium, which share similar chemical properties. Despite their name, rare earth elements are fairly abundant. The challenge for manufacturers and countries dependent upon these minerals though, is two-fold. First, they generally occur naturally as mixtures of various rare earth elements and are not always found in economically exploitable concentrations. Second, the minerals must be mined, then concentrated into rare earth oxides, and finally, separated into individual rare earth elements and compounds.
A major proportion of the world’s rare earth reserves are located in China, and the production and consumption of rare earths is dominated by China. China alone accounted for more than 85% of world rare earth production in 2012, and consumed approximately 70%. In terms of consumption, Japan followed with approximately 15% of world production in 2012, but has no domestic rare earth reserves. This imbalance creates an uncomfortable dependence for Japan and other countries requiring both a steady supply of these elements and pricing stability.
Recently, these issues came to a head in a dramatic way, according to Samantha Wietlisbach, principal analyst of specialty chemicals at IHS Chemical and the report’s lead author. “Supply disruptions over the last few years interrupted Japanese automotive and electronics industry production and sent shock waves through the global manufacturing industries that rely on rare earths,” Wietlisbach said
“Other governments have realized their national security interests and industrial sectors were vulnerable, since China dominates the market in terms of both supply and demand,” she said. “The supply shortages also resulted in unprecedented price spikes, impacting global consumers of these materials. It was a wake-up call to address diversity of supply and to explore possible substitutions. This, in turn, has led to many new mining projects being announced globally, with rare earth ore as the main product.”
The various markets for rare earths, as mixtures, individual elements, or compounds, have developed in a very sporadic fashion and are, essentially, a two-tiered system, Wietlisbach said. “New markets are strong and growing for individual, specialized and high-purity rare earths, particularly for neodymium, which is used in high-performance magnets (permanent magnet motors or PMs) for hybrid vehicles, offshore turbines and defense guidance systems. While the markets for mixed rare earth oxides (REOs), which formerly constituted the bulk of the business, show stagnant demand.”
A large share of the world’s rare earth concentrate supply is produced as a by-product or co-product of other mining activities. Minerals containing rare earths are currently produced in seven countries and regions: China, the CIS, the U.S., Australia, India, Brazil, and Malaysia. Lanthanum and cerium accounted for nearly 60% of world consumption of rare earth oxides in 2012, followed by neodymium, yttrium, and praseodymium. The other elements accounted for less than 5% of total rare earth consumption worldwide.
Lanthanum is used for rechargeable batteries in hybrid cars, fluid catalytic cracking catalysts (FCC) used to produce gasoline efficiently, as a glass additive for camera, and telescope lenses, and in lasers and x-ray films to reduce the amount of radiation exposure for patients. Neodymium’s most important use is in high power magnets, which are found in hybrid vehicle motors, wind turbines, low voltage electric motors, but also mobile phones, microphones, speakers, and headphones. Yttrium is critical for television screens and monitors, as well as in fluorescent lights to produce brilliant white light. It is also used in microwave communications, in lasers, and as transmitters and transducers of acoustic energy. Praseodymium is used widely in metallurgical applications, especially high-strength magnesium alloys used in aircraft engines.
“There is a distinct imbalance between the consumption of some rare earth oxides compared to the amount produced,” Wietlisbach said. “In 2012, there was an excess of cerium and dysprosium produced, but for lanthanum, praseodymium, neodymium and europium, demand exceeded supply. However, with that being said, the expected growth in demand for offshore wind turbines during the next five to 10 years means the amount of dysprosium and other less-abundant rare earths used to produce PM motors, are expected to be in short supply.”
Western Europe is a former major center for rare earth product manufacturing, with France being the dominant producer. However, there is no longer any production of primary rare earth products in the region. Rare earth materials are now produced in Europe only from refined or part-refined rare earth compounds and metals. In refined rare earth product terms, the world’s leading producer is Rhodia Rare Earth, a subsidiary of Solvay. A large share of its production is at the La Rochelle, Poitou, France facility, with additional production capacity in Baotou, China, and in the U.S.
Last year, approximately 64% of the rare earths used in Western Europe went into catalysts. Like Western Europe, Japan has no domestic rare earth minerals reserves –supplies are imported. Unlike the U.S. and Western Europe, Japan uses only small amounts of rare earths to make catalysts. Approximately 20% of REOs in Japan are used for magnets, whereas glass and ceramic applications, particularly polishing compounds and additives for camera lenses, represent more than 20% of REO consumption in Japan. Phosphors are another significant application for rare earths in Japan.
Approximately two-thirds of the rare earths used in the U.S. are consumed in catalysts. Within the catalysts segment, rare earths are consumed in automotive emission control catalysts and FCC catalysts used in petroleum refining. According to the IHS report, these catalyst markets will continue to grow through 2017, as emission control regulations are tightened and the efficiency of catalytic cracking is further promoted.
To address concerns of market dependence, industry, and governments are looking for ways to substitute the rarer, more expensive rare earths with less costly alternatives that have a lower supply risk. The elements neodymium, dysprosium, and samarium, found in rare earth permanent magnets, have been placed on a list of critical elements by the European Commission and the U.S. government. Leading up to 2012, there was practically no recycling of end-of-life magnets, but the issue of recycling the rare earth elements in these magnets has become a high priority issue.
The Japanese government is committed to finding ways to decrease demand of rare earths from China, and has invested in rare earth projects in Vietnam and Kazakhstan to try and secure supply. The country announced a special budget in 2011 to reduce consumption and develop alternative materials, which includes projects in rare earth recycling and finding suitable substitutes for rare earths in applications such as in PMs.
The U.S. has estimated rare earth reserves of more than 13 million metric tons, the largest reserve outside China and the CIS. The rare earth mine of Mountain Pass, Calif., which was reopened in 2012 after being closed for 10 years, is operated by Molycorp, and holds one of the major world reserves of rare earths. Other reserves of REOs are located primarily along the eastern seaboard of the U.S., in Florida, Georgia, and South Carolina. Rare earth minerals are also found in Wyoming, Colorado, Idaho, New Mexico, New York, and Tennessee.
For more information on the IHS Chemical CEH Rare Earth Minerals and Products Report, click here.