Energy Shift
Rare Earth Elements: Where in the World Are They?
Rare Earths Elements: Where in the World Are They?
Rare earth elements are a group of metals that are critical ingredients for a greener economy, and the location of the reserves for mining are increasingly important and valuable.
This infographic features data from the United States Geological Society (USGS) which reveals the countries with the largest known reserves of rare earth elements (REEs).
What are Rare Earth Metals?
REEs, also called rare earth metals or rare earth oxides, or lanthanides, are a set of 17 silvery-white soft heavy metals.
The 17 rare earth elements are: lanthanum (La), cerium (Ce), praseodymium (Pr), neodymium (Nd), promethium (Pm), samarium (Sm), europium (Eu), gadolinium (Gd), terbium (Tb), dysprosium (Dy), holmium (Ho), erbium (Er), thulium (Tm), ytterbium (Yb), lutetium (Lu), scandium (Sc), and yttrium (Y).
Scandium and yttrium are not part of the lanthanide family, but end users include them because they occur in the same mineral deposits as the lanthanides and have similar chemical properties.
The term “rare earth” is a misnomer as rare earth metals are actually abundant in the Earth’s crust. However, they are rarely found in large, concentrated deposits on their own, but rather among other elements instead.
Rare Earth Elements, How Do They Work?
Most rare earth elements find their uses as catalysts and magnets in traditional and low-carbon technologies. Other important uses of rare earth elements are in the production of special metal alloys, glass, and high-performance electronics.
Alloys of neodymium (Nd) and samarium (Sm) can be used to create strong magnets that withstand high temperatures, making them ideal for a wide variety of mission critical electronics and defense applications.
| End-use | % of 2019 Rare Earth Demand |
|---|---|
| Permanent Magnets | 38% |
| Catalysts | 23% |
| Glass Polishing Powder and Additives | 13% |
| Metallurgy and Alloys | 8% |
| Battery Alloys | 9% |
| Ceramics, Pigments and Glazes | 5% |
| Phosphors | 3% |
| Other | 4% |
The strongest known magnet is an alloy of neodymium with iron and boron. Adding other REEs such as dysprosium and praseodymium can change the performance and properties of magnets.
Hybrid and electric vehicle engines, generators in wind turbines, hard disks, portable electronics and cell phones require these magnets and elements. This role in technology makes their mining and refinement a point of concern for many nations.
For example, one megawatt of wind energy capacity requires 171 kg of rare earths, a single U.S. F-35 fighter jet requires about 427 kg of rare earths, and a Virginia-class nuclear submarine uses nearly 4.2 tonnes.
Global Reserves of Rare Earth Minerals
China tops the list for mine production and reserves of rare earth elements, with 44 million tons in reserves and 140,000 tons of annual mine production.
While Vietnam and Brazil have the second and third most reserves of rare earth metals with 22 million tons in reserves and 21 million tons, respectively, their mine production is among the lowest of all the countries at only 1,000 tons per year each.
| Country | Mine Production 2020 | Reserves | % of Total Reserves |
|---|---|---|---|
| China | 140,000 | 44,000,000 | 38.0% |
| Vietnam | 1,000 | 22,000,000 | 19.0% |
| Brazil | 1,000 | 21,000,000 | 18.1% |
| Russia | 2,700 | 12,000,000 | 10.4% |
| India | 3,000 | 6,900,000 | 6.0% |
| Australia | 17,000 | 4,100,000 | 3.5% |
| United States | 38,000 | 1,500,000 | 1.3% |
| Greenland | - | 1,500,000 | 1.3% |
| Tanzania | - | 890,000 | 0.8% |
| Canada | - | 830,000 | 0.7% |
| South Africa | - | 790,000 | 0.7% |
| Other Countries | 100 | 310,000 | 0.3% |
| Burma | 30,000 | N/A | N/A |
| Madagascar | 8,000 | N/A | N/A |
| Thailand | 2,000 | N/A | N/A |
| Burundi | 500 | N/A | N/A |
| World Total | 243,300 | 115,820,000 | 100% |
While the United States has 1.5 million tons in reserves, it is largely dependent on imports from China for refined rare earths.
Ensuring a Global Supply
This tight control of the supply of these important metals has the world searching for their own supplies. With the start of mining operations in other countries, China’s share of global production has fallen from 92% in 2010 to 58%< in 2020. However, China has a strong foothold in the supply chain and produced 85% of the world’s refined rare earths in 2020.
China awards production quotas to only six state-run companies:
- China Minmetals Rare Earth Co
- Chinalco Rare Earth & Metals Co
- Guangdong Rising Nonferrous
- China Northern Rare Earth Group
- China Southern Rare Earth Group
- Xiamen Tungsten
As the demand for REEs increases, the world will need tap these reserves. This graphic could provide clues as to the next source of rare earth elements.
Electrification
Where are Clean Energy Technologies Manufactured?
As the market for low-emission solutions expands, China dominates the production of clean energy technologies and their components.
Visualizing Where Clean Energy Technologies Are Manufactured
When looking at where clean energy technologies and their components are made, one thing is very clear: China dominates the industry.
The country, along with the rest of the Asia Pacific region, accounts for approximately 75% of global manufacturing capacity across seven clean energy technologies.
Based on the IEA’s 2023 Energy Technology Perspectives report, the visualization above breaks down global manufacturing capacity by region for mass-manufactured clean energy technologies, including onshore and offshore wind, solar photovoltaic (PV) systems, electric vehicles (EVs), fuel cell trucks, heat pumps, and electrolyzers.
The State of Global Manufacturing Capacity
Manufacturing capacity refers to the maximum amount of goods or products a facility can produce within a specific period. It is determined by several factors, including:
- The size of the manufacturing facility
- The number of machines or production lines available
- The skill level of the workforce
- The availability of raw materials
According to the IEA, the global manufacturing capacity for clean energy technologies may periodically exceed short-term production needs. Currently this is true especially for EV batteries, fuel cell trucks, and electrolyzers. For example, while only 900 fuel cell trucks were sold globally in 2021, the aggregate self-reported capacity by manufacturers was 14,000 trucks.
With that said, there still needs to be a significant increase in manufacturing capacity in the coming decades if demand aligns with the IEA’s 2050 net-zero emissions scenario. Such developments require investments in new equipment and technology, developing the clean energy workforce, access to raw and refined materials, and optimizing production processes to improve efficiency.
What Gives China the Advantage?
Of the above clean energy technologies and their components, China averages 65% of global manufacturing capacity. For certain components, like solar PV wafers, this percentage is as high as 96%.
Here’s a breakdown of China’s manufacturing capacity per clean energy technology.
| Technology | China’s share of global manufacturing capacity, 2021 |
|---|---|
| Wind (Offshore) | 70% |
| Wind (Onshore) | 59% |
| Solar PV Systems | 85% |
| Electric Vehicles | 71% |
| Fuel Cell Trucks | 47% |
| Heat Pumps | 39% |
| Electrolyzers | 41% |
So, what gives China this advantage in the clean energy technology sector? According to the IEA report, the answer lies in a combination of factors:
- Low manufacturing costs
- A dominance in clean energy metal processing, namely cobalt, lithium, and rare earth metals
- Sustained policy support and investment
The mixture of these factors has allowed China to capture a significant share of the global market for clean technologies while driving down the cost of clean energy worldwide.
As the market for low-emission solutions expands, China’s dominance in the sector will likely continue in the coming years and have notable implications for the global energy and emission landscape.
Energy Shift
The ESG Challenges for Transition Metals
Can energy transition metals markets ramp up production to satisfy demand while meeting ever-more stringent ESG requirements?
The ESG Challenges for Transition Metals
An accelerated energy transition is needed to respond to climate change.
According to the Paris Agreement, 196 countries have already committed to limiting global warming to below 2°C, preferably 1.5°C. However, changing the energy system after over a century of burning fossil fuels comes with challenges.
In the above graphic from our sponsor Wood Mackenzie, we discuss the challenges that come with the increasing demand for transition metals.
Building Blocks of a Decarbonized World
Mined commodities like lithium, cobalt, graphite and rare earths are critical to producing electric vehicles (EVs), wind turbines, and other technologies necessary to burn fewer fossil fuels and reduce overall carbon emissions.
EVs, for example, can have up to six times more minerals than a combustion vehicle.
As a result, the extraction and refining of these metals will need to be expedited to limit the rise of global temperatures.
Here’s the outlook for different metals under Wood Mackenzie’s Accelerated Energy Transition (AET) scenario, in which the world is on course to limit the rise in global temperatures since pre-industrial times to 1.5°C by the end of this century.
| Metal | Demand Outlook (%) 2025 | 2030 | 2035 | 2040 |
|---|---|---|---|---|
| Lithium | +260% | +520% | +780% | +940% |
| Cobalt | +170% | +210% | +240% | +270% |
| Graphite | +320% | +660% | +940% | +1100% |
| Neodymium | +170% | +210% | +240% | +260% |
| Dysprosium | +120% | +160% | +180% | +200% |
Graphite demand is expected to soar 1,100% by 2040, as demand for lithium is expected to jump 940% over this time.
A Challenge to Satisfy the Demand for Lithium
Lithium-ion batteries are indispensable for transport electrification and are also commonly used in cell phones, laptop computers, cordless power tools, and other devices.
Lithium demand in an AET scenario is estimated to reach 6.7 million tons by 2050, nine times more than 2022 levels.
In the same scenario, EV sales will double by 2030, making the demand for Li-ion batteries quadruple by 2050.
The ESG Challenge with Cobalt
Another metal in high demand is cobalt, used in rechargeable batteries in smartphones and laptops and also in lithium-ion batteries for vehicles.
Increasing production comes with significant environmental and social risks, as cobalt reserves and mine production are concentrated in regions and countries with substantial ESG problems.
Currently, 70% of mined cobalt comes from the Democratic Republic of Congo, where nearly three-quarters of the population lives in extreme poverty.
| Country | 2021 Production (Tonnes) |
|---|---|
| 🇨🇩 Democratic Republic of the Congo | 120,000 |
| 🇦🇺 Australia | 5,600 |
| 🇵🇭 Philippines | 4,500 |
| 🇨🇦 Canada | 4,300 |
| 🇵🇬 Papua New Guinea | 3,000 |
| 🇲🇬 Madagascar | 2,500 |
| 🇲🇦 Morocco | 2,300 |
| 🇨🇳 China | 2,200 |
| 🇨🇺 Cuba | 2,200 |
| 🇷🇺 Russia | 2,200 |
| 🇮🇩 Indonesia | 2,100 |
| 🇺🇸 U.S. | 700 |
Around one-fifth of cobalt mined in the DRC comes from small-scale artisanal mines, many of which rely on child labor.
Considering other obstacles like rising costs due to reserve depletion and surging resource nationalism, a shortfall in the cobalt market can emerge as early as 2024, according to Wood Mackenzie. Battery recycling, if fully utilised, can ease the upcoming supply shortage, but it cannot fill the entire gap.
Rare Earths: Winners and Losers
Rare earths are used in EVs and wind turbines but also in petroleum refining and gas vehicles. Therefore, an accelerated energy transition presents a mixed bag.
Using permanent magnets in applications like electric motors, sensors, and magnetic recording and storage media is expected to boost demand for materials like neodymium (Nd) and praseodymium (Pr) oxide.
On the contrary, as the world shifts from gas vehicles to EVs, declining demand from catalytic converters in fossil fuel-powered vehicles will impact lanthanum (La) and cerium (Ce).
Taking all into consideration, the demand for rare earths in an accelerated energy transition is forecasted to increase by 233% between 2020 and 2050. In this scenario, existing producers would be impacted by a short- to medium-term supply deficit.
The ESG dilemma
There is a clear dilemma for energy transition metals in an era of unprecedented demand. Can vital energy transition metals markets ramp up production fast enough to satisfy demand, while also revolutionising supply chains to meet ever-more stringent ESG requirements?
Understanding the challenges and how to capitalise on this investment opportunity has become more important than ever.
Sign up to Wood Mackenzie’s Inside Track to learn more about the impact of an accelerated energy transition on mining and metals.
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