Growth is expected for this sector for decades to come. But these critical metals have increasingly become a trade war pawn between the US and China. Our experts dive into global supply and demand trends to give you the inside scoop on what we can expect in 2024.
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Rare earths have a key role to play in decarbonization, and demand for this group of critical metals is expected to be strong in the coming decades as governments worldwide take steps to meet energy transition targets.
Used in the high-strength magnets found in much of the latest technology, from smartphones and wind turbines to electric vehicles (EVs) and defense systems, rare earth elements (REEs) are not rare; however, finding secure sources of supply is becoming increasingly important to countries around the world due to China’s dominance of the sector.
As 2024 begins, what is the rare earths forecast for the year ahead? The Investing News Network (INN) reached out to analysts in the space to find out. Read on to learn what they had to say.
Rising supply and depressed demand translated into declining prices for REEs in 2023.
These trends placed pressure on prices for magnet rare earths — neodymium (Nd), dysprosium (Dy), terbium (Tb) and praseodymium (Pr) — as downstream users hesitated to make restocking purchases.
“Slower demand for EVs in 2023 has had a negative impact on demand growth for magnets in the current year. Essentially we have seen supply overshoot demand across the EV supply chain,” Willis Thomas of CRU Group told INN in an email. “This will pick up again as EV sales penetration will reach 46 percent by 2030, and in general EV demand has resisted economic headwinds; (it’s) just that supply got ahead of demand.”
“The overall rare earth industry is increasingly being driven by the disparity between Nd and Dy as proxies for light and heavy rare earth magnet raw materials,” the Project Blue team told INN via email. “Myanmar was an important source of feedstock for Chinese refineries to support a growing deficit in supply, though high strategic stocks have also played a key factor in supporting demand growth for neodymium-iron-boron (NdFeB) magnets.”
Looking ahead to 2024, what supply and demand factors are set to have the biggest impact on rare earths?
Project Blue isn’t expecting any big surprises out of China’s rare earths quotas for 2024.
“Chinese supply is better placed to account for its domestic requirements of light rare earths, with the industry paying close attention to the H1 quota announcements, which have signaled strong growth over the last year,” said the market intelligence firm’s team of analysts. “But with relatively weak financial performance, we expect the quota to remain largely flat this year, but still a level capable of meeting domestic 2024 demand.”
Jon Hykawy, president and director of Stormcrow Capital, expressed hesitation at making a call on supply. However, he did say that Chinese mines such as Bayan Obo could easily supply global EV market demand for Nd and Pr — “if Chinese suppliers were acceptable to western buyers.” In terms of heavy rare earths like Dy and Tb, which give magnets heat resistance, Hykawy said sources outside of China would be useful.
“Also useful would be cheaper and better ways of processing, separating and metalizing rare earths. Whether investors will get excited about that in an environment where rare earth prices are low, it’s hard to say,” he added.
“A key supply chain to follow will be to see where separated rare earths are sent from MP Materials and how much feedstock (unseparated) is exported to China,” said the Project Blue team. Investors should keep an eye out for further “potential advances in rare earth separation capacity, which in turn will fundamentally need the support from metal, alloying and magnet production capacity to diversify magnet supply chains for OEMs.”
In terms of demand, the largest consumer of rare earths will continue to be the permanent magnet industry, namely NdFeB magnets. Project Blue expects this segment of the market to achieve the strongest year-on-year growth in 2024 and beyond. “China is still by far the largest source of NdFeB magnets, and growth in the country will underpin global demand dynamics in 2024,” the firm’s analyst team told INN.
CRU Group’s Thomas also sees magnet metals such as light rare earths Nd, Pr and samarium as the best positioned to perform well in 2024 and going forward, especially as EV sales increase globally.
Compared to supply, Stormcrow’s Hykawy finds the demand picture easier to paint. Globally, EV sales remain strong, despite the challenges of reliable charging infrastructure and range anxiety on the part of buyers.
“But small-battery plug-in hybrids or range-extended EVs can offer the best of both worlds, and they need electric motors,” he noted. “Rare earth-based magnets offer the simplest approach to powerful and compact electric motors, so continued sales of EVs should bring growing demand for these materials.”
While there don’t seem to be any market-shaking catalysts on the horizon for rare earths in 2024, there are few key factors that could have an impact on the industry in the new year and beyond.
“Over 2024, the stability of supply from Myanmar will be an important factor to maintain a balance for heavy rare earths. The pace of the ramp up from Chinese investments in Laotian projects will add critical raw materials and potentially replace high-risk supply from Myanmar,” the Project Blue team told INN. “Any disruptions in supply from either Myanmar or Laos will quickly filter through to a reaction in Dy prices, with a lesser impact on Nd.”
For his part, Hykawy thinks 2024 will be short on rare earths catalysts, but he pointed to a number of trends in the space to follow, such as the few companies outside of China developing cost-effective processing technologies.
“There is also the continuing development of alternatives to rare earths to consider, new technology that can provide strong magnets without using rare earths. Again, probably not happening in 2024, but something to keep an eye on,” he said. “Rare earths remain very important to the automotive industry, but it’s not easy to point to a single factor that will rejuvenate investor interest in this space.”
Speaking about rare earths alternatives, Thomas said CRU Group doesn’t expect to see “any more momentum on non-REE magnets in EVs,” mainly because of lower rare earths prices and higher availability. “There are known tradeoffs in performance to move away from REE-based magnets, and a large market move to non-REE magnets would come only with sustained high prices or limits to REE magnet availability,” he said.
INN also asked Thomas what actions governments are likely to take in an effort to break away from Chinese supply. He thinks there will continue to be both “carrot” and “stick” approaches to addressing the problem.
“In the end, this boils down to cost in where materials are sourced. Policies which impact relative cost of production/sourcing will be the ones that move the needle on Chinese reliance shares,” said Thomas.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: August Minerals and Appia Rare Earths and Uranium are clients of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
The rare earths market was punctuated by significant fluctuations during the first half of 2024.
Global supply continued to struggle to meet rising demand, particularly outside of China. Early stage projects in countries like the US, Korea and India are showing promise, but have so far been insufficient to close the growing supply gap.
Conversely, while rare earths demand across key end-use segments — electric vehicles (EVs) and renewable energy technologies — started the year strong, some demand eroded during Q2, which was reflected in lower prices.
Geopolitical tensions also intensified toward the end of the quarter, and are likely to impact the market through H2.
Global rare earths supply has been increasing annually since 2020, when total production topped 240,000 metric tons (MT). In 2023, global mine supply grew to 350,000 MT, with the majority of this fresh supply coming out of China.
In 2020, the Asian nation produced 140,000 MT of rare earths, with output ballooning to 240,000 MT in 2023.
“China’s Ministry of Industry and Information Technology raised 2023 quotas for rare-earth mining and separation to 240,000 tons and 230,000 tons of REO equivalent, respectively,” as per the US Geological Survey. “In 2023, mine production quotas were allocated to 220,850 tons of light rare earths and 19,150 tons of ion-adsorption clays.”
In February, the country issued its first round of 2024 quotas.
The quotas were targeted at China’s two major rare earths companies. “China North Rare Earth Corp has been allocated a mining quota for light rare earth of 94,580 tonnes and a smelting quota of 88,010 tonnes, China Rare Earth Group received a total mining quota of 40,420 tonnes including 30,280 tonnes for light rare earth, and 10,140 for ion-absorbed rare earth (medium and heavy rare earth), and a total smelting quota of 38,990 tonnes,” Fastmarkets explains.
In terms of top-producing mines, China’s Bayan Obo mines in Inner Mongolia make up the majority of market supply, followed by Mount Weld in Australia and Mountain Pass in the US.
Looking ahead to 2030, China is expected to remain the top producer of magnet rare earths, while Australia’s share of global production is projected to rise to 18 percent, and the US is anticipated to maintain a 7 percent share.
“The major concern for magnet rare earths is not a huge gap between demand and supply like in the case of copper or lithium, but rather an extremely important level of geographical concentration of today’s as well as future mining and refining projects that expose this market significantly to supply disruptions,” it reads.
Now Lynas controls 15 percent of the rare earths market and is planning on expanding its presence in the space.
Currently Lynas operates the Mount Weld rare earths mine in Western Australia, and is a major global producer of neodymium-praseodymium (NdPr) oxide, a key material for neodymium iron boron (NdFeB) magnets.
In late June, Lynas announced plans to begin producing separated heavy rare earths products at its Kuantan refinery in Malaysia, with commissioning and ramp-up expected by mid-2025. The facility will have an estimated annual throughput of 1,500 MT of a mixed heavy rare earths compound, which includes samarium, europium, gadolinium and holmium. Initial estimates for dysprosium and terbium production capacity haven’t been provided.
“This circuit reconfiguration at Lynas Malaysia provides a pathway to accelerate our commitment to processing all of the elements in the Mt Weld ore body,” said Amanda Lacaze, CEO and managing director of Lynas.
The funding will facilitate the construction of a sintered NdFeB rare earth magnet plant in an American city. It is expected to be operational by late fall 2025.
The project, which began in March, is supported by the US Qualifying Advanced Energy Project Tax Credit (48C) under the Inflation Reduction Act). In its first phase, this initiative allocated US$10 billion in funding, with US$800 million in tax credits, to select projects focused on critical materials recycling, processing and refining.
Along with oversupply, 2024 has brought weaker rare earths demand in key end-use segments, like the EV sector, due to lower consumer buying. In turn, that has caused prices to trend lower.
She identifies weak EV demand, a global economic downturn, previous volatility and geopolitics as culprits.
These rules, covering the mining, smelting and trade of these crucial materials, emphasize that rare earth resources belong to the state. The government will oversee the development of China’s rare earths industry, where the country has become the leading producer, accounting for nearly 90 percent of global refined output.
Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
The geopolitical macroeconomist and best-selling author emphasized that a shift toward real assets is taking place.
“We are at the cusp of I think a major, major bull cycle for real assets because of weakness in banks, because I think the (US Federal Reserve) and other central banks are less relevant with respect to monetary policy and controlling anything. And because the world is evolving very quickly (due to) artificial intelligence, data, technology, the energy transformation,” she said on the sidelines of the Rule Symposium in Boca Raton, Florida.
“All of these things require more resources than we’ve actually mined in a lot of cases. So I think the main thing to think about as an investor is that some of these are long-term plays … in your investment portfolio.”
Watch the interview for more from Dr. Prins on gold, uranium and rare earths.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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Speaking to the Investing News Network, Joe Mazumdar, editor of Exploration Insights, explained how he’s getting low-risk exposure to the gold sector as the metal’s price continues to move.
“They had a plant where they were producing the concentrate — the carbonates — as a product. Their idea is to get to oxide, and now they’ve just done a deal with a company that could convert it potentially to metal,” he said.
Watch the interview above for more from Mazumdar on those and other topics.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Aclara Resources is a client of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Affiliate Disclosure: The Investing News Network may earn commission from qualifying purchases or actions made through the links or advertisements on this page.
Rare earths are important for many of today’s technologies and tomorrow’s carbon-free economy.
Investors may not be very familiar with the metals individually, but the group of elements is found in technology all around us, commonly in the form of rare earth magnets, which are used in everything from electric vehicles to smartphones to wind turbines. As technology continues to advance, they are expected to remain in high demand.
Another long-term story in the rare earth element (REE) market is China’s dominance of the overall industry. With geopolitics at the forefront, countries are focusing more and more on attaining domestic sources of critical metals, and companies are working to find new sources in diverse locations to meet this growing demand.
Yearly gain: 95.65 percent; market cap: C$31.97 million; current share price: C$0.45
Resouro Strategic Metals is an exploration and development company with mineral projects in Brazil, including the Tiros rare earths and titanium project in Minas Gerais and the Novo Mundo gold project in Mato Grosso.
According to the company, the maiden resource estimate includes a combined measured and indicated resource representing 1 billion metric tons at 4,050 parts per million total rare earth oxides (TREO) containing 1,120 parts per million magnetic rare earth oxides and 12 percent titanium dioxide.
“The (mineral resource estimate) places the Tiros Project as one of the largest undeveloped titanium and rare earth resource globally and in Brazil,” states the company’s press release.
Yearly gain: 44.44 percent; market cap: C$88.2 million; current share price: C$0.52
Aclara Resources is a development-stage heavy rare earths company developing its ionic clays deposits, including the Penco module in Southern Chile and the Carina module in Central Brazil.
The company’s patented, award-winning Circular Mineral Harvesting closed-circuit rare earths extraction process eliminates the need for a tailings dam and conditions spent clays for future revegetation with native forests.
Investor Kit
Yearly gain: 18.18 percent; market cap: C$25.48 million; current share price: C$0.13
Commerce Resources is developing the Ashram rare earths and fluorspar deposit located in Québec, Canada.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Aclara Resources is a client of the Investing News Network. This article is not paid-for content.
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