Technical Metals

New focus on rare earth elements

Summary: Electric cars are booming and wind farms are being vigorously expanded as part of the energy transition. Both of these technologies depend on magnets, and rare earths are indispensable for magnet production. However, the hype about these technology metals at the end of the last decade turned out to be unsustainable. Their prices plummeted and many projects have been cancelled. But now prices are rising again. The industry and the important players in the sector are well prepared. The following report presents current market figures and trends.

1 Introduction

Rare earths are again in the spotlight. The global boom in electric vehicles and renewable energies is fueling a growing demand for rare earths. This group of metals has special chemical properties, which are the essential prerequisite for modern technologies and especially for numerous high-tech products [1]. In the total of 17 rare earth elements (REE), two groups are distinguished according to their atomic number in the periodic table of the elements or according to their electron configuration. The light rare earth elements (LREE) include lanthanum, cerium, praseodymium, samarium and neodymium. The main representatives of heavy rare earth elements (HREE) are scandium, yttrium, gadolinium, dysprosium and terbium. The term “rare earths” is, however, misleading. The correct designation would be rare earth metals.

Rare earths are relatively widely distributed in the Earth’s crust, but rarely in a sufficient concentration for economic exploitation. The rare earth metals are usually found only in relatively small amounts in scattered mineral ore deposits and often intermixed in minerals. Fig. 1a shows the distribution of the major LREEs and HREEs in the Earth’s crust, along with some base metals such as copper, lead and tin. It can be seen that in particular some of the LREEs are relatively plentiful, but also most HREEs are just as prevalent as lead and tin. In terms of global production, however, the rare earths lag far behind the base metals (Fig. 1b). For instance, the 2017 copper production was about 19.7 million tons per year (Mta), while the combined production of LREE and HREE only amounted to about 0.14 Mta.

According to figures from the US Geological Services (USGS), the rare earths suffered a significant market slump in 2011 (Fig. 2). Global production volumes had fallen from 134 thousand tonnes (kt) in 2009 to 113 kt in 2011. However, production quantities have meanwhile risen again to 130 kt. China is still the largest producing country, even though her share fell from 96.3 % in 2009 to 80.8 % in 2017. Large discrepancies exist between the USGS figures for China and the country’s own officially published production statistics, at least up until 2014. A critical factor is the amount of illegal production in China. According to the Chinese industrial association, about 40 000 tonnes were still produced illegally in 2014. As a result of numerous mine closures and drastic punishments, the figure has meanwhile dropped to about 15 000 t. It is expected that by 2020 there will be no more illegal production volumes.

The largest achieved production volumes are for the three LREEs cerium, lanthanum and neodymium (Fig. 3). These 3 REEs alone account for over 80 % of global production. Cerium leads with a quantity of 38.4 %, which on the basis of the estimated total production output of 130 kt corresponds to a quantity of about 50 kt. The production quantities of lanthanum and neodymium amount to 32 kt and 22.5 kt respectively. A further 5 REEs together account for 20.8 % of global production, led by the HREE Yttrium with 10.3 kt. Dysprosium, an REE in high demand, accounts for 1.1 % of the total production figure, or 1.4 kt. Some sources also state production quantities of up to 1.5 kt. The remaining 9 REEs only account for 1.8 % of global production, which amounts to a total quantity of only 2.3 kt.

2 The REE industry in China

In China there are 6 major state-owned companies that produce rare earth elements (REE). Fig. 4 shows how the state production quotas were divided among these 6 producers in 2016 and 2017. Of the allocated total amount of 105 kt, the China Northern Rare Earth Group received 56.7 %, i.e. 59.5 kt. The next largest quantities were allocated to the China Southern Rare Earth Group with 25.5 % and to Chinalco (Aluminum Corp of China) with 11.8 %. The three largest companies thus alone account for a market share of almost 94 %. Taken together, the remaining three companies China Minmetals, Fujian Rare Earth Group and Xiamen Tungsten Industry only have a market share of 6.1 %, with about 2 % being allocated to each company. For the first half of 2018, China has increased the allocations by 40 %.

China Northern Rare Earth was founded in 1961 and has been listed on the Shanghai Stock Exchange since 1997. The company is headquartered in Baotou in Inner Mongolia, the centre or “Silicon Valley” for rare earths in China. With its numerous subsidiaries and production plants, the company covers the entire supply chain from the mining of rare earths, through the processing and extraction to the metal production, research and manufacturing of diverse products such as high-performance magnets or rechargeable nickel-hydrogen batteries. In 2017, China Northern Rare Earth achieved sales of 10.2 billion Chinese yuan (RMB, equivalent to US$ 1.52 bn). Up to now this company, together with the China Southern Rare Earth Group, has dictated the world’s rare earth prices.

In China, rare earths are mined in 9 provinces. Fig. 5 shows the allocations for the years 2016 and 2017 according to type of rare earth. The group of light rare earth elements (LREE) accounts for 87.1 kt or almost 83 % of the overall total of 105 kt, while heavy rare earth elements (HREE) only account for 17.9 kt or 27 %. Inner Mongolia and Sichuan are the most important production provinces in China, in particular because of their large deposits of LREE. HREEs are mined in 6 provinces, albeit in relatively small quantities, with Jiangxi producing about 50 % of the HREE output. Based on the Chinese Government’s previous practice, the 40 % increase in quotas for all provinces for the first half of 2018 leads to the expectation that the production output will increase from 105 kt to 147 kt in 2018.

Estimates by China’s Rare Earth Industry Association indicate that up to 2014, there were numerous illegal mines that produced about 40 000 tonnes, or 27.6 % of Chinese production. The Chinese government wants to completely shut down these operations as soon as possible, and also intends to raise the environmental standards for the existing licensed mines. However, it is also assumed that a large part of the illegal production quantity originates from the overproduction of licensed companies. Market experts assume that by raising the production quotas China is actually retroactively legitimizing the “illegal” overproduction. In comparison with 2017, China will thus place an additional 42 kt of rare earths on the market in 2018.

The prices for each element of the rare earths differ greatly and depend very much on supply and demand. Fig. 6 shows the prices of important REEs in China. The reference date for the prices is August 6, 2018. The depicted prices are for REE oxides with 99.0 to 99.9 % purity, or in a few cases for oxides with 99.5 to 99.9 % purity. Metal prices are usually significantly higher. While the prices for lanthanum, cerium and yttrium ranged from 13.5 to 20 RMB/kg (2.0 to 2.9 US$/kg), prices of up to 318 and 415 RMB/kg (46.2 and 60.3 US$/kg) were achieved, for example, for neodymium and praseodymium. However, dysprosium and terbium were the highest priced at 1150 and 2950 RMB/kg respectively (167 and 429 US$/kg). In the course of the year, praseodymium, neodymium, dysprosium and terbium showed double-digit price increase rates.

As a result of the foreseeable additional production volumes brought to market by China, further price increases are unlikely and will not be enforceable unless even China is unable to cover the demand for certain rare earths. One element for which this could be the case is Dysprosium. Its worldwide production quantity has declined e.g. from about 2300 t in 2013 to just 1500 t in 2017, a decrease of just under 35 %. This was mainly due to the closure of illegal mines in China. The country accounts for 98 % of global dysprosium production. The market analysts of Adamas Intelligence estimate that the illegal mines accounted for slightly more than half of the production output in 2013. For the coming years up until 2025, a demand of more than 2600 t is expected. The great demand for this element is being created largely by the boom in electric vehicles.

3 The REE industry outside of China

In addition to China, significant quantities of rare earth elements (REE) are produced in only 5 other countries. Fig. 7 shows the production quantities for the year 2017 according to the statistics of the USGS. The total worldwide production is 133.5 kt, with her 105 kt China has a share of 78.7 %. Australia takes second place with 20 kt. Lagging far behind come Russia, Brazil, Thailand and India. Other producing countries include Malaysia and Vietnam. The largest companies producing REE outside of China are currently Lynas Corporation (Australia and Malaysia), Solikamsk Magnesium Works (Russia), CBMM in Brazil and Indian Rare Earth. In Malaysia and Vietnam, Pegang Mining Company and Lavreco Mining should also be mentioned.

The 40 % cut in Chinese export quotas for REE in 2010 and the subsequent price boom attracted the attention of investors all around the world. At that time, Molycorp operated the Mountain Pass Mine in California. Since its commissioning in the years up to the mid-1980s, the mine has supplied almost 50 % of the global production output. In July 2010, the company was listed on the stock exchange with the stock quoted at US$ 14. The share value subsequently rose to US$ 74. However, with the price decline of rare earths in 2011 Mountain Pass became uneconomic and the share price plummeted. The company had to file for insolvency in 2015. In 2017, MP Materials took over Mountain Pass (Fig. 8) in order to reactivate the mine. Behind MP Materials are the US investors JHL Capital Group and QVT Financial LP, as well as the Chinese Leshan Chenge, who owns a minority stake.

The Lynas Corporation fared better. In May 2011, the company commissioned a processing plant at the Mount Weld Mine in Western Australia (Fig. 9). The mining capacity is 66 000 t of concentrate for the production of 26 500 t of REE. The concentrate is refined in the Lynas Advanced Materials Plant (LAMP) (Fig. 10) in Gebeng/Malaysia, situated close to the Kuantan deep water port. LAMP has been in operation since the end of 2012. Of course, the rare earth price collapse also seriously impacted Lynas, and losses were consequently incurred in the initial years of operation. However, thanks to its investors and clients from Japan, Lynas has grown over the years to be the largest producer of REE outside of China. In the financial year 2018, it produced 17 753 t of REE, of which 5444 t were neodymium and praseodymium (NdPr). This is a significant increase compared to 2017 (16 003 t of REE and 5332 t of NdPr).

In 2011, there were more than 50 well advanced REE projects worldwide, excluding China. This figure is taken from the TMR Advanced Rare-Earth Projects Index published by Technology Metals Research [2]. However, most of these projects were discontinued because the rare earths price collapse and reduced demand shook investors’ confidence. The regions with several interesting projects particularly include Australia, North America, Africa and Europe. Projects are considered to be particularly promising if, on the one hand, high REE contents are present in the ores and a long mine lifetime is possible and, on the other hand, the operating costs for selected REEs such as NdPr are comparatively low. Precious by-products and impurities, e.g. radioactive substances, also play an important role in the evaluation.

Of the promising projects, two have meanwhile been put into operation. In July 2018, Northern Minerals opened a pilot plant (Fig. 11) at Browns Range in the East Kimberley Region of Western Australia. The plant is expected to produce just under 600 t of REE oxides every year, with 50 t consisting of the highly sought-after dysprosium. The processing plant is expected to reach its full capacity with over 5000 t/a of REE oxides after three years. It employs conventional technologies with SAG mills, magnetic separation processes, flotation and tailings treatment. The second manufacturer, Rainbow Rare Earth, produced 525 t of REE concentrates from the Gakara Mine in Burundi in the first half of the year. Gakara (Fig. 12) is the only productive mine in Africa so far and is characterized by a particularly high content of REE oxides, amounting to 47 – 67 %, including large amounts of NdPr.

Numerous other promising projects are in various planning stages with possible commissioning between 2019 and 2022. In Australia, these include Alkane Resources’ Dubbo Project, Hastings Technology Metals’ Yangibana Project and Arafura Resources’ Nolans Project. In Africa, there is Peak Resources’ Ngualla Project and the Songwe Hill Project of the Canadian company Mkango Resources. In North America, there are Ucore’s Bokan Mountain Project in Alaska, Texas Mineral Resources’ Round Top Project, and Commerce Resources’ Ashram Project in Northern Quebec. Furthermore, in Europe there are two projects in Greenland, i.e. Greenland Minerals and Energy’s Kvanefjeld project and Hudson Resources’ Sarfartoq project, as well as Leading Edge Materials’ Norra Kärr project in Sweden. Other sources also refer to CBMM’s Araxa projects in Brazil as well as AMR Mineral Metals’s Madencilik project in Turkey and the Russian company Rostec’s Tomtor project in Yakutia.

Alkane Resources’ Dubbo Project in New South Wales is polymetallic and has a rated annual production quantity of approximately 25 000 t. The planned production comprises REE (27 %) and the rare metals zirconium (65 %), niobium (8 %) and hafnium (50 t/a). All the necessary approvals for plant operation have been received, a pilot plant has already delivered end-product samples to customers, and with project financing secured, Alkane is ready to begin construction of the processing plant (Fig. 13). The project costs of the plant are estimated at A$ 1.3 billion for a 1 Mta ROM capacity and A$ 0.8 billion for a modularized 1.5 Mta ROM capacity, which can be built in two stages. The mine lifetime for the 1 Mta plant could be 75 years. At the current price level, the REEs would account for about 30 % of the revenues from the mining operation.

By contrast, Peak Resources’ Ngualla project in Tanzania has the sole objective of mining and recovering REE. The REE oxide reserve in the orebody is stated to be nearly 0.9 million t. Almost 90 % of the value of the recoverable material is high-purity neodymium and praseodymium. The company plans to process 624 000 t/a of dry ore in a plant (Fig. 14) equipped with a multistage flotation facility, to produce 28 300 t/a of REE concentrate (45 %) with 12 700 t/a of REE oxide. The company is going to construct a refinery (Fig. 15) in the Tees Valley/UK, for processing the ore concentrate into high-purity REE metals. This involves calcination of the concentrate in a rotary kiln. After passing through various purification stages, the product will be separated into the different REEs by means of solvent extraction. The practicality of this process has already been tested in pilot plants.

Large quantities of REE are also found in deposits in Kvanefjeld/ Greenland. Greenland Mineral and Energy (GMEL) plans to operate a mine, processing plant and refinery there with its project partner Shenge Resources, who acquired a 12.5 % stake in GMEL in 2016. Shenge’s particular contribution to the project is the incorporation of modern Chinese technology, which has already resulted in various process improvements and optimizations. The deposit is expected to contain 11.1 million t of REE oxides, and also high levels of uranium and zinc. The intended products of the operation include more than 5000 t/a of neodymium and praseodymium oxide as an intermediate product. The economic separation of the uranium presents a challenge, but is considered solvable. Fig. 16 shows a greatly simplified flow chart of the operation. Previous pilot tests for the recovery of REE and the separation and enrichment of the uranium have been successful.

4 Market trends

Since the boom year of 2011, the market for rare earths has been unsteady. It is estimated that the demand for REE oxides for applications such as fluorescent lamps, NiMH batteries and computer hard disk storage plummeted by nearly 30 000 t/a. Part of the loss, however, is attributable to customers changing over to replacement materials, as many REE purchasers and manufacturers of high-tech products feared a threat to their production due to the increasing supply and price uncertainty. However, there were also rapidly growing application segments for REE, so that 5-year-old figures concerning the most important applications for REE are no longer very meaningful today. Another problem is that the worldwide figures for REE are still subject to significant uncertainty.

Out of the many estimates relating to the application market, we would like to present here a current model by Arafura Resources. Based on an evaluation of figures from various analysts, REE suppliers, associations and official country data, Arafura has developed a model for supply and demand. The results are shown in Table 1. Currently, about 36.8 kt are used for magnets, which thus already account for 27 % of global demand. By 2025, annual growth rates (CAGR) of 8 % are expected here. Catalytic converters take second place with 21 % of demand and annual growth rates of 6 %. In general, a 5 % market growth is forecast, whereby some segments, such as batteries or fluorescent lamps, are forecast to stagnate or even have a negative growth as other technologies displace REE products.

The figures of Arafura Resources naturally take into account the current market figures and forecasts for the demand for NdPr. For example, it is estimated that 41 million electric cars will be purchased annually up to the year 2040, each requiring 1.7 kg of NdPr, which would account for almost 70 000 t of NdPr for electric cars alone. For wind turbines, 150 kg of NdPr per MW of electric power is required and an electric bicycle needs 0.1 kg of NdPr. In 2017, the sales figure for E-bikes had already reached 30 million. It is possible that a bottleneck might develop for some REEs. Accordingly, the price spread for different REEs is likely to widen even further in the future.

5 Prospects

The outlook for rare earths up to the year 2025 and beyond is quite promising. This is particularly due to the growing demand for REE for electric vehicles, alternative power generation and many other modern technologies. Key analysts expect market growth to accelerate from 2020 onwards. It should be noted, however, that not all REEs will grow equally, but that a few will show high double-digit growth rates, while others will show zero growth and stagnate. For this reason, it makes little sense to derive market development trends from the growth of all REEs. It is also interesting that some analysts predict that China will have to import some REEs as early as 2020.

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