Market

Supply constraints

With REE separation and refining plants predominantly located in China (which accounts for +90% market share of the rare earths refining market), Rainbow is one of the few companies planning to produce separated rare earth oxides outside of Asia. In so doing, Rainbow will be contributing to the establishment of an independent, ethical and sustainable supply chain of REEs.

As a result of the projected escalation in demand as well as supply chain concerns, REEs have been designated as critical and strategic metals by many territories, including the United States, the United Kingdom, China, Japan, Australia, Canada and the European Union, each of which are promoting a drive toward greater raw material security.

However, a rare earths supply deficit is likely due to a number of challenges to bringing new REE mines into production, which include:

• Many projects being low quality (low grade) or having high levels of radioactive elements;
• Estimated high levels of capital for complex processing, ranging from US$200-500m for major listed rare earths projects. Additionally, the lead time for a mine to be brought into operation usually requires at least a decade²; and
• Rare earth prices are unlikely to support significant development of traditional projects with high capex and opex as well as long lead times, whereas Rainbow’s project economics are supported at current prices.

Whilst some rare earth supply increase is expected over the next decade, it is not forecast to meet the growing demand for permanent magnet materials. According to Argus, new projects will be required to supply c. 25% of the rare earths market by 2030.

Supply vs demand outlook 2021 – 2032