Rare Earth Elements Market

Market Overview

The global rare earth elements market size was USD 3.83 billion in 2022. It is estimated to reach an expected value of USD 9.18 billion by 2031, registering a CAGR of 10.2% during the forecast period (2023-2031).

 The rare earth elements consist of seventeen metallic elements. These include the fifteen lanthanides including, Lanthanum, Cerium, Praseodymium, Neodymium, Promethium, Samarium, Europium, Gadolinium, Terbium, Dysprosium, Holmium, Erbium, Thulium, Ytterbium, and Lutetium, and Scandium and Yttrium. Moreover, these elements offer unique catalytic, nuclear, metallurgical, electrical, luminescent, and magnetic properties. The main drivers of market expansion are the increased demand from rising nations and the dependence on "Green Technology" on rare earth elements.

Market Dynamics

Global Rare Earth Elements Market Drivers

High Demand from Emerging Economies

Some of the key emerging economies across the globe include China, India, Indonesia, Brazil, South Africa, and Mexico, among others. In these emerging economies the demand for smartphones, electric vehicles, and computers and their components, among others, is likely to rise in the coming years. In a mobile phone, rare earth elements are used in circuits, sensor materials, speakers, batteries, and other components. For instance, In China, according to the GSM Association, the unique mobile subscribers in 2020 accounted for 1.22 billion and are expected to reach 1.26 billion by 2025, thereby likely enhancing the demand for rare earth elements used during mobile phone manufacturing in the coming years. In India, according to the Ministry of Electronics & Information Technology, Government of India, the value of mobile phone production in the country accounted for INR 2,140 billion in FY2020. It was estimated to be INR 2,200 billion for FY2021, which in turn is likely to enhance the demand for various rare earth elements from the mobile manufacturing segment in the country through the years to come. According to the GSM Association, smartphone adoption in Indonesia accounted for 74% in 2019 and is expected to reach 89% by 2025. This will further enhance the demand for the studied market in the coming years.

Reliance of 'Green Technology' on Rare Earth Elements

Rare earth elements significantly find their application in various green technologies, such as wind energy, electric vehicle, and catalytic converter. Moreover, rare earth elements such as neodymium, praseodymium, and dysprosium, among others, are used in magnets of wind turbines. According to the Lynas Rare Earths Ltd, a 3 MW direct drive wind turbine consumes around 2 tons of rare earth permanent magnets.

According to the Global Wind Energy Council (GWEC), in 2020, the global wind industry installed 93 GW of new capacity, registering a growth rate of 53% year-on-year. However, the above growth is not sufficient to achieve net carbon zero by 2050; thereby, countries across the globe need to be installing wind power three times faster over the next ten years, such that to maintain a net zero track and avoid the negative climate change impacts, which is likely to enhance the production of wind turbine systems, including rare earth element-based magnets used in its motors, through the years to come.

Some of the critical rare earth elements used in the catalytic convertors of automobiles include Cerium, Lanthanum (La), Gadolinium (Gd), and others. Moreover, other catalysts used in these converters can also dope with lanthanides, specifically in three-way catalytic converters. Therefore, all the factors above from various green technologies are likely to drive the demand for the market studied.

Global Rare Earth Elements Market Restraint

Inconsistent Supply of Rare Earth Elements

The supply risks of critical minerals, such as rare earth elements minerals, occur due to domestic factors and interruptions in international trade. Some of the domestic factors include unrest and civil wars, mining disasters, environmental factors, and political conflicts within the producing countries. Significant risks also arise from trade wars. China suspended the supply of rare earth elements to Japan. China accounts for 85% of the world's capacity to process rare earth elements into material inputs used for manufacturing various high-end technology products. Around 4/5 of rare earth elements imported by the United States originate from China. As of August 2019, considering the trade war with the United States, China had imposed a 25% tariff in 2019 on imports of commodities extracted by MP Materials, a US-based producer of rare earth elements. 

According to the USGS, the estimated value of rare-earth compounds and metals imported by the United States in 2020 accounted for USD 110 million, registering a decline from USD 160 million in 2019. The post-COVID-19 slowdown in manufacturing activities will likely lead to significant changes in the trade of rare earth elements between China and the United States. Thus, China plays a significant role in the global supply chains of rare earth elements; therefore, all the factors mentioned above regarding the inconsistent supply of rare earth elements are likely to restrain the studied market.

Global Rare Earth Elements Market Opportunities

Increasing Scandium Usage in Aerospace Applications

Several scandium-containing aluminum alloys are used in aerospace applications. Aircraft manufacturing companies are mainly interested in scandium alloyed aluminum materials, as their application can help reduce aircraft weight by about 15%-20%.

Besides, scandium alloyed aluminum also can employ weldable structures, which indicates the cost reduction potential for aircraft manufacturing companies. The alloys are highly efficient, help avoid welded joints cracking and increase fatigue life by up to 200%. Aluminum-scandium alloys produce welded gas tanks, structures for dashboard panels and compartments, and large stamped and welded aircraft structures. They also find application in fuselage stringers of large cargo aircraft.

Additionally, the Boeing Commercial Outlook 2021–2040 predicts that by 2040, 8,945 additional deliveries will be made in the Asia–Pacific area (excluding China), with a market service value of USD 1,945 billion. A further 8,700 fresh deliveries with a market service value of USD 1,800 billion will be produced in China alone by 2040. According to the India Brand Equity Foundation (IBEF), the country's aviation sector is anticipated to receive investments totaling INR 35,000 crore (USD 4.99 billion) over the next four years, which could result in opportunities for aluminum-scandium alloy from the aerospace manufacturing sector in the years to come. Therefore, all the above factors from the aerospace sector will likely create opportunities for the market studied in the coming years.

Regional Analysis

The global rare earth elements market is segmented into Asia-Pacific, Europe, South America, and Middle East & Africa

Asia-Pacific dominated the market and is anticipated to exhibit a CAGR of 4.7% during the forecast period. China stands to be the richest in the world in terms of natural resources. China is a significant producer of a diversified range of rare earth elements at cheaper costs than other producers. Currently, China supplies most of the world's precious rare earth elements, making changes in China's manufacturing sector sensitive to the supply of rare earth elements globally. In 2021, the report said 60% of global rare earth production came from China, citing data from the U.S. Geological Survey. The country holds the highest share in minerals production, followed by other major countries, such as Australia, the United States, and Russia, which create lucrative opportunities for the market in metallurgy applications.

Europe is the second largest region. It is anticipated to reach an expected value of USD 7466 million by 2031, registering a CAGR of 4.2%. Germany's largest automobile industry in Europe. Germany leads the European automotive market, with 41 assembly and engine production plants contributing to one-third of Europe's total automobile production. Germany, which is one of the leading manufacturing bases of the automotive industry, is home to manufacturers from different segments, such as equipment manufacturers, material and component suppliers, engine producers, and whole system integrators. In 2020, Germany produced 3.74 million cars and light commercial vehicles, which declined by 24.4% compared to 4.94 million vehicles produced in 2019. In H1 2021, the country produced 1,850,287 vehicles which increased by 16% over the 1,595,742 vehicles produced in H1 2020. Germany is one of Europe's largest producers and consumers of electric vehicles. This growth is supported by the government's push toward all-electric cars by 2040 is likely to drive the market demand.

South America is the third largest region. The Brazilian glass industry is likely to be one of the most lucrative markets in the country. The increasing production activities, along with the structural changes occurring in the Brazilian glass industry, are expected to provide a positive outlook for the rare earth element demand in the country, in the near future. The increasing demand for glass products is estimated to increase glass production, which, in turn, is likely to fuel the demand for REE in the next few years. Brazil has some of the largest manufacturing plants for electronics in South America. The country houses several large electronics manufacturing plants for companies, including Samsung, LG, Foxconn, Dell, Multilaser, Positivo, AOC, Lenovo, and the Leadership Group. Consumers in the country are more careful while buying expensive products, and this behavior is expected to continue throughout the coming years. Despite the challenging situation, Samsung and LG continue to strengthen their positions as the leading electronics manufacturing companies depicting a scope for strong market potential. Therefore, with the massive demand from various end-user industries, the market for rare earth elements will likely increase in the forecast period.

Segmental Analysis

The global rare earth elements market is bifurcated by the element, application, and region.

By element, the global rare earth elements market is segmented into cerium (oxide, sulfide, and other elements), neodymium (alloy), lanthanum (alloy, oxide, and others), dysprosium, terbium, yttrium, scandium and other elements. The cerium segment dominated the market and is estimated to exhibit a CAGR of 5% during the forecast period. Cerium compounds have a wide range of applications. The dioxide is used in the optical sector for fine glass polishing, as a decolorizer in glass manufacture, in petroleum cracking catalysts, and as a three-way automobile emission catalyst that takes advantage of its dual valence (3+/4+) properties. Cerium, like other rare-earth metals, is used in a variety of ferrous alloys to scavenge Sulphur and oxygen and to nodulate cast iron. It is also utilized in nonferrous alloys to increase superalloy oxidation resistance at high temperatures. Cerium oxide is a catalyst component in catalytic converters, which are used to clean exhaust from vehicles. It also catalyzes the reduction of nitrogen oxides (NOx) to nitrogen gas. All new cars now include a catalytic converter consisting of a ceramic or metal substrate, an aluminum and cerium oxide coating, and an active surface layer of finely scattered metal such as platinum or rhodium. All such properties drive segment growth. 

By application, the global rare earth elements market is segmented into catalysts, glass and polishing, ceramics, phosphors, metallurgy, magnets, and other applications. The catalyst segment accounted for the largest market share and is estimated to grow at a CAGR of 4.6% during the forecast period. The electron structure of the rare earth elements makes them useful as catalysts (accelerators) for chemical reactions. Cerium and lanthanum are the main rare earth used in catalytic applications since these two metals are much more abundant and available for much lower prices. Rare earth elements (REEs) are crucial catalysts in refining petroleum. A crucial step in gasoline manufacturing is fluid catalytic cracking (FCC), which uses lanthanum and cerium as additives. These REEs improve gasoline production while lowering air pollution caused by the oil refining process. It is unlikely that a slight reduction in rare earth supply would significantly affect gasoline supplies or prices. The demand for more active, hydrothermally stable products with superior yield performance led to the usage of rare earth in FCC catalysts. Rare earth oxides (REO) improved catalytic activity and prevented acid site loss during normal unit operation to achieve these goals. Catalyst manufacturers create catalysts with various rare earth levels that enable the best performance from each FCC unit. The increasing usage of catalytic convertors and R&D in petroleum refining will likely increase the demand for rare earth elements from the catalysts segment in the forecast period.

Recent Developments

• September 2022 - The Separation Rapids Lithium Project, located north of Kenora, Ontario, produces petalite concentrates, according to an announcement from Avalon Advanced Materials Inc. The off-take agreement with a significant non-Chinese international glass ceramic manufacturer is for a long period.
• September 2022 - LG Energy Solution (LGES; KRX: 373220) has signed a non-binding memorandum of understanding (the "MOU") with Avalon Advanced Materials Inc. ("Avalon" or the "Company") under which Avalon will start supplying LGES with battery-grade lithium hydroxide in 2025.