The rare earths industry outside of China is in pursuit of massive expansion, but the road ahead is far from simple and will require close collaboration across the value chain, delegates heard at last week's Rare Earths Industry Association (REIA) annual conference in Barcelona.
"We need to get bigger," Canada-based Neo Performance Materials' chief executive, Constantine Karayannopoulos, said at the event. "The opportunity [to expand the supply chain] is the best I have seen in the past 30 years," he said, pointing to growing momentum in the private sector and government awareness. But he warned that "we need to learn the right lessons [from the past] and pay attention to the right things" in order to move forward.
The sentiment was echoed by all, highlighting the wider desire for diversified sourcing and huge future demand projections.
Argus Consulting forecasts that global neodymium demand will reach 93,401t rare earth oxide (REO) by 2033, up from 47,160t REO in 2023. Praseodymium demand is forecast to rise to 31,532t REO, from 15,924t REO over the same period, and dysprosium demand is estimated to reach 7,230t REO, up from 3,345t REO this year. By comparison, based on current supply and likely future additions, Argus Consulting expects that by 2033 global neodymium supply will total 73,106t REO, praseodymium supply will reach 22,710t REO and dysprosium supply will hit 3,314t REO. The data point to looming deficits for several key products unless significant new production capacity comes on stream at various stages of the value chain and a need for huge investment if trade flows are to expand outside of China.
Segmenting the value chain
The rare earth supply chain is notorious for its intricacy, from its complex and diverse mineralogy to the processing and separation stages, and then further downstream to a web of different applications.
With such a complicated puzzle to piece together and high capital costs, companies are trying to understand how best to segment the value chain.
"There's a big debate in Australia about how far downstream is really sensible," said Rowena Smith, managing director of Perth-based Australian Strategic Minerals (ASM).
She urged "intelligent partnership with each other if we're going to move fast", noting that it is typically difficult for those on the supply side to fully commit to project development until a customer is lined up. Companies should also be figuring out where to have shared infrastructure and shared facilities in order to help with capital intensity, she said.
"Maybe the cut should be at the oxide point", with processes further downstream carried out by other companies, suggested Alexander Barcza, vice-president of permanent magnets at Germany's Vacuumschmelze. It is not ideal to have a large number of companies spread across each stage of the value chain, nor is it the right approach to have one company attempting to do everything, he said.
Speaking to attendees on the sidelines of the conference, opinions were varied. Some consider simplicity to be best — start with a specific focus, then build out once the project is proving viable. Others aspire for vertical integration. Some see monazite as worth unlocking for its rare earth elements, while others think companies are better off selling their monazite as it is. And so it goes on.
As companies weigh up whether to undertake midstream processing — for which most mining firms turn to China at present — REEtec's commercial director, David Brock, drew attention to a raft of additional complexities for which many regions are not currently prepared. "In Europe today, there are no places to handle the safe, long-term storage of radioactive nuclides from rare earth production [….] That's the biggest thing — how do we handle radionuclides from our feedstock?"
Funding and regulation
Governments and original equipment manufacturers (OEMs) are being urged to play a greater role in helping projects outside of China move forward, particularly as the volatile nature of rare earth prices (see chart) can make it more difficult for companies to secure the necessary investment. As one attendee said, when investments can stand in the region of $1bn and prices are swinging sharply, "you need to have nerves of steel".
From OEMs, this support may come in the form of more offtake agreements.
From governments, a wider range of measures is sought, from funding to regulation to international partnerships.
"We need a permitting process that is more efficient," said Jani Adolfsson-Tallqvist, development manager at Finnish Mineral Group, referring to Europe's cumbersome licensing system that has made it difficult for any new critical mineral mines to move forward in the past decade. Meanwhile, those focused on recycling are seeking appropriate legislation to help drive capacity development, standardisation and the accumulation of feedstock volumes.
Attendees agreed that the EU's proposed Critical Raw Materials Act and the US Inflation Reduction Act are positive gestures but more is needed from governments globally to really make a difference. "The next stage for governments is really enabling that funding piece," ASM's Rowena Smith said, adding that "governments that provide real dollars will see the main progress".
Also moving up the agenda are ESG and lifecycle analysis, which are expected to be important factors in securing investment and the support of OEMs for projects. Certification from bodies such as The Initiative for Responsible Mining Assurance (Irma) is increasingly expected, said Neo's Karayannopoulos, while Richard Arlot, key account manager at Switzerland's Bomatec, noting the automotive industry's desire to better understand how the rare earth supply chain and processes work. ESG will be an important focus, with customers likely to give suppliers a score that will be as important as the price of the product itself, Arlot said.
