Medium Rare: What’s Cooking in the Rare Earth Element Market?Jul 12th, 2012 | By Nicholas Epstein
Elisa Alonso, Andrew M. Sherman, Timothy J. Wallington, Mark P. Everson, Frank R. Field, Richard Roth, and Randolph E. Kirchain
Environmental Science & Technology. 2012.
Rare Earth Elements (REE), a group of 17 metals with unique physical and chemical properties, are an increasingly vital component in clean energy and defense technologies. REEs are central to the construction of solid oxide fuel cells, magnets, lasers, super-conductors, aluminum alloys, wind turbines, and electric vehicles. Concerns over the supply of REEs surfaced last year when China suddenly restricted their production while claiming to be instituting new pollution regulations.
In Evaluating Rare Earth Element Availability: A case with Revolutionary Demand From Clean Technologies, authors Elisa Alonso el al. analyze the supply-chain for Rare Earths, estimating current stocks and projecting future demand.
REE supplies are vulnerable for several reasons. Most importantly, one nation, China, controls 98 percent of the world’s REE production. Further, REEs are found together in geological formations. As a result, REEs are co-mined, so production is highly concentrated geographically. Lastly, Rare Earth extraction has negative environmental impacts and China’s poor labor standards add social concerns to the supply market.
The authors identify circumstances under which REEs may experience revolutionary demand, that is, when new sudden technological innovations sharply increase the demand for REEs. They explain that revolutionary demand changes can lead to supply and price instability in the materials market. This effect is harmful to manufacturers, who depend on a consistent supply-chain, and deters additional innovation.
Historically, REE production has always increased to meet new high growth demands. Between 1970 and 2010, the growth rate in REE demand averaged 5.6 percent, while global production averaged 6.5 percent in annual growth. However, annual production rates were volatile, fluctuating between positive 34 and negative 21 percent over the same period.
With concerns over industry’s growing demand for REEs, the authors construct five alternative “Potential Future Demand Scenarios” to understand future trends in REE production:
Scenario (A) REE production markets experience equivalent demand growth at historical rates of 3.7 percent and retain current market share
Scenario (B) Individual REE demand markets grow at historic rates of 5.3 percent
Scenario (C) Demand grows at a higher than historical rate, as projected by industry insiders and experts
Scenario (D) Demand grows at the same rate as (B) but greenhouse gas emissions are legally capped at 450 parts per million, implying a greater need for REEs in renewable electricity generating technologies
Scenario (E) Demand grows at the historical rate as in scenario (B), but with a greater degree of automotive electrification, resulting in greater need for REEs
The authors conclude only Scenario (C) presents a threat to the REE supply chain. Under Scenario (C), based on industry insider projections, global supply would require 8.6 percent annual growth for the next 25 years. This level of growth is likely to strain the REE market and drive up prices.
REEs are in fact rather abundant. Global unearthed REE deposits are estimated at 110 million tons, with fifty percent located in China. Large deposits are also located in the U.S. and the former Soviet bloc countries. The “static depletion index” of REEs, the duration at which all known reserves will last at projected demand and production rates, is roughly 870 years.
As the authors explain, the worry with REE supply is not their “geophysical abundance,” but, “whether the [REE] supply base can expand at a sufficient pace to meet future demand particularly for individual RE metals.” The authors see recycling of In-Use Rare Earth stocks as a wise precautionary avenue to relieve stress on the supply market in the face of unexpected revolutionary demand.
Feature Photo: cc/The U.S. National Archives