Rare Earths: Unravelling the Key issues in the Battery Metals Landscape
The global demand for battery metals, particularly lithium, is soaring as the electric vehicle (EV) sector is expanding rapidly. The growth in demand is outpacing the supply. Copper, lithium, nickel, and graphite are often the most discussed, but it’s important not to overlook the importance of rare earth metals like neodymium, praseodymium, yttrium, terbium, and dysprosium. These metals play a vital role in enhancing the efficiency of electric vehicles and making wind farms more effective with reduced maintenance requirements.
Supply and Production Challenges
Developing new mines and bringing them into production is a time-consuming process, typically taking around 10 years or even longer. Although there is a healthy pipeline of projects, the supply is expected to lag behind the demand due to various factors, including funding and the complexity of project execution. While the price of lithium reached astronomical levels in the past year, exceeding $6,000 per ton, it will decrease as supply catches up. However, the production ramp-up will require a considerable amount of time.
Analyst Interview
Mining Analyst John Meyer introduces a film which discusses the topics mentioned in this article. The film was produced as part of our work with Interactive Investor, one of the UK’s largest execution platforms
Further investor educational pieces can be found at ii’s youtube channel.
Dominance of the Chinese Market
The battery metals market is largely dominated by China, which controls around 60% of primary production and 90% of downstream processing of rare earth minerals. The Chinese also exert influence over Myanmar’s production, further consolidating their hold on the market. Notably, the four key rare earth minerals in high demand are neodymium, praseodymium, dysprosium, and terbium, which are essential for producing permanent magnets used in electric vehicles and wind turbines.
Strategic Importance and Government Intervention:
The strategic significance of rare earth metals cannot be understated. These minerals find applications in military technologies such as fighter jets, missile guidance systems, and night vision goggles. To ensure a diversified supply chain and reduce reliance on China, many countries have taken initiatives to support domestic production of rare earth metals. For instance, Australia received a government funding of $1.2 billion for a rare earth project, aiming to leverage cleaner hydrometallurgical processes. Similarly, Canada and the UK are exploring the potential for rare earth production.
Challenges and Future Outlook:
While the battery metals market faces challenges in terms of supply and production delays, there is an increasing focus on exploring new discoveries and advancing technologies. Niobium, closely related to tantalum, plays a significant role in producing alloys and capacitors for electronics. Tantalum’s pricing is particularly sensitive to incremental changes in demand due to its relative scarcity. The market is expected to stabilise in the next three to six months, with some pressure anticipated due to the reduced demand for consumer electronics and the emergence of lithium mines in Australia.
The film in this article was produced at this years mining indaba conference in Cape Town. The film has an introduction from John Meyer, Mining Analyst at SP Angel, followed by commentary from Neil Herbert of Atlantic Lithium, Bernard Aylward of Kodal Minerals, Julien Bosché of Trident Royalties, George Bennett of Rainbow Rare Earths, and Charles Bray of Aterian Plc. The film was produced as part of our work with interactive investor, which is one of the uk’s largest execution platform.