In contrast to previous years the 2017 conference had a lot more positive to offer. Although prices were on the decline in the last couple of weeks there is still some major growth for most of rare earth elements within 2017. In particular the increasing demand for magnetic materials together with a decreasing amount of illegal material is having some positive impact on the future alignment of this market.
Shift in market shares
With growing supply from the Australian Lynas, China’s rare earths supply decreased to a total of 83%. This is still massive, however, not to forget that it was like 95% during the price rally in 2011. According to Lynas’ Vice President Pol Le Roux more than 20% of the world’s supply for the most important magnet metals Neodymium and Praseodymium now come from Lynas.
Anti-crime actions in China
According to the market analysts from SMM there is increasing success in fighting illegal behaviour. They are saying that the amount of illegal material was nearly halved within the last 12 months. There are indeed a number of different measures that had been introduced by the Government. First to mention is the consolidation of more than 400 companies into just 6 groups. Now there are special tools for invoicing, inspection and usage checks in place. And those still being identified as illegal will be blacklisted and banned from the market.
Growth driver magnets
A lot of our new technologies are built on the use of permanent magnets. First to mention is the car industry. Whereas there was about 500,000 electric vehicles in 2016 this number is expected to quadruple by 2020. And it will probably reach the 10 million mark by 2025. A typical electric motor takes about 2 kg of a permanent magnet. Wind turbines is another driver in using those magnets. There is about 0.67 tons of a Pr/Nd containing magnet needed for 1 MW of wind power. Not to forget the revolution in elevator technology. Thyssen Krupp’s rope-free elevators are also based on the use of permanent magnets. This technology will lead to significantly reduced waiting times with a maximum of 30 seconds regardless how tall a building may be.
Out of the more than 200 projects that were promoted during the high-price times in 2011/2012 there is not much left. But for those who still want to go operational there were a few things being addressed. In fact any new project will need to be able to withstand lower prices as we had seen in 2015/2016. The element Cerium is expected to become a major problem. There is already a surplus in global Cerium supply. But to cope with the increasing demand for Neodymium and Praseodymium the oversupply of Cerium will become massive. There is about 20% of Pr/Nd content in the ore; but more than 40% of Cerium! There is some good possibility that the amount of non-sellable Cerium will make all other elements more expensive.