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 NdPr oxides and the SEG+ product (mix of heavy REE) outside of Asia. In so doing, Rainbow will be contributing to the establishment of an independent, ethical and sustainable supply chain of REE.

As a result of the projected escalation in demand as well as supply chain concerns, REE 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) and/or having complex mineralogy and 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 may not support the development of traditional rare earth mining projects with high capex and opex as well as long lead times, whereas Rainbow’s project economics are supported even at low 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. While REE supply is forecast to continue to grow, it is not expected to be able to keep pace with the fast-growing demand for REPM.

The latest Argus forecasts foresee a supply deficit for Magnet REE emerging in 2026 and growing to 23kt by 2040. These forecasts are predicated on supply from new non-Chinese projects growing to 20% of total supply by 2040. Delays to new supply additions could accelerate the predicted supply deficits, as could increasing demand for rare earth permanent magnets from emerging technologies.

Supply vs demand outlook 2020 – 2034

Source:
Argus Media