Market

Supply constraints

With REE separation and refining plants predominantly located in China (accounting for a 90% market share of the rare earths refining market in 2019¹), Rainbow is one of the few companies with operations in other parts of the world. It is regularly noted that the Chinese dominance of the rare earths market has resulted in supply chain uncertainties, and that an ethical and sustainable supply chain for strategic materials is required.

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 the US Federal Department of the Interior, the Government of China, and the EU Parliament, 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.

NdPr Oxide – Forecast supply – Demand balance