Market

About rare earth elements

RARE EARTH ELEMENTS ARE FUNDAMENTAL TO LIFE IN THE 21ST CENTURY

Comprising 17 unique chemical elements, rare earth elements (“REE”) are often separated into two sub-groups based on atomic weight:

• light REE (Lanthanum, Cerium, Praseodymium, Neodymium and Samarium), which are more abundant; and
• heavy REE (Europium, Gadolinium, Terbium, Holmium, Erbium, Thulium, Ytterbium, Lutetium as well as Scandium and Yttrium), which tend to be rarer.

Whilst rare earths are not actually that scarce within the Earth’s surface, they are rarely concentrated into mineable ore deposits and are often not economically viable to extract. They also co-exist within the same orebody, creating complications from a separation and processing perspective. Economic sources of REE are principally found within the minerals bastnasite, monazite, and loparite and lateritic ion-adsorption clays.

Some REE minerals contain significant amounts of radioactive elements such as uranium and thorium, which have the potential to contaminate air, water, soil and groundwater. However, Rainbow’s projects demonstrate low levels of radioactive elements, an important factor that we believe sets the Company apart when compared to many typical rare earth development projects.

The REE Market

Due to their unique electrical and magnetic properties, REE allow for miniaturisation and much lighter, stronger, resilient, and efficient components. The four REE that represent the majority of the value in the REE market are Nd, Pr, Dy and Tb (the “Magnet REE”) due to their function in rare earths permanent magnets (“REPM”). REPM are inputs in many of the goods that underpin society, including consumer electronics, the traditional automotive industry, white goods, elevators and heating, ventilation and air conditioning (HVAC).

REPM are also critical to more advanced manufacturing sectors, including EVs, wind turbines, modern defence, robotics and many other new technologies. These applications anchor durable, growing demand for rare earths, underpinned by decarbonisation and automation trends.
REE are strategically important as their unique qualities allow for vital functionality, with high barriers to substitution. Often called the “vitamins” of modern industry, REE may only make up a tiny fraction of an end-product by mass and cost, yet they are essential for that product to function. This outsized importance‑to‑cost ratio underscores why REE sustain such strategic focus.

Currently China controls ca. 70% of rare earth mining, but over 90% of the downstream rare earth processing and manufacturing. This reliance on one country creates supply chain vulnerability which, combined with a forecast deficit of supply compared with rising demand, has driven countries around the world to officially recognise REE as critical minerals.

Global demand for REE is forecast to grow by 60% from 2024 to 2040, driven by fast growing demand for rare earth permanent magnets, and
Argus Media forecasts an emerging market deficit as supply is not expected to be able to keep pace with demand.

Global demand for magnet rare earth oxides (“REOs”) (Nd, Pr, Dy, Tb)