The rare earths industry is heading for a turbulent period. The looming addition of tariffs on rare earth raw materials and finished products traded between the USA and China and increasingly stringent environmental inspections disrupting mine and refined rare earth supply in China are exacerbating an already tight market for key rare earth elements entering a period of strong growth in demand for rare earth permanent magnets.
China remains the global leader in the production of both mined rare earth products and refined rare earth compounds, with Chinese production accounting for 86% of global refined production in 2017. Six state owned rare earth enterprises dominate rare earth production in China, with China North Rare Earth Group reported to be the largest producer in 2017, predominantly from the Baiyun Obo mine in Baotau, Inner Mongolia. Illegal production in China continues to support the Chinese domestic rare earths industry, as demand outstrips official production quotas. Continued government inspections and greater tracking of material caused illegal Chinese production to fall sharply in 2017, which is expected to extend into 2018.
Rare earth production at operations outside China is forecast to increase significantly in the years to 2028, as existing producers expand production capacity and numerous projects in Australia, Russia, the Americas and Africa are scheduled to be commissioned. The increase in non-Chinese production is expected to significantly reduce China’s stranglehold on REE supply, though China is expected to remain the major supplier of REE products to the global market.
Roskill forecasts rare earth demand to increase by 8% in 2018, driven largely by developments in the use of rare earth permanent magnets in automotive and renewable energy generation. The percentage of neodymium demand compared to total rare earth demand has increased from 19% in 2013 to over 23% in 2017. Demand for rare earth permanent magnets is forecast to show strong growth in the years to 2028, which is expected to further distort rare earth demand ratios with neodymium, praseodymium and dysprosium forming a greater proportion of total demand. Lanthanum and cerium have continued to form the majority of rare earth demand by volume, with consumption of these elements estimated to total 84.7kt REO in 2017, compared to around 53kt REO for the remaining rare earth elements. Their use in the catalyst industry is expected to increase as emissions standards in most countries become more stringent, though growth could be impacted by the uptake of electric vehicles and fundamental shifts in the automotive industry.
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