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How Important Are Rare Earth Metals? VERY.

On February 18, 2022, Reuters reported that "Pentagon plans to boost the stockpile of rare earth metals, cobalt and lithium it manages for the U.S. government to reduce its long-term dependence on China."

Rare earths are a group of 17 metals that, after processing, are used as components in hundreds of products, particularly high-tech consumer products, such as cellular telephones, computer hard drives, electric and hybrid vehicles, and flat-screen monitors and televisions. Significant defense applications include electronic displays, guidance systems, lasers, and radar and sonar systems.

Although the amount of rare earths used in a product may not be a significant part of that product by weight, value, or volume, the rare earth metal can be necessary for the device to function. For example, magnets made of rare earths often represent only a small fraction of the total weight, but without them, the spindle motors and voice coils of desktops and laptops would not be possible.

Not in My Backyard

During the last 30 years, China increasingly monopolized the production of rare earth metals while the United States - despite acknowledging the importance of reducing the risk of supply chain disruption - elected to allow China take a leading role.

In 1993, China produced 38% of world production of rare earth metals and the United States produced 33%. 12% was produced by Australia and several other countries - Brazil, Canada, South Africa, Sri Lanka, and Thailand making up the remainder.

Fast forward to 2008.

In 2008, China produced more than 90% of world production of rare earth metals.

And fast forward to 2011.

In 2011, China produced 97% of world production of rare earth metals.

The Chinese Government also began to limit the number of Chinese and Sino-foreign joint-venture companies that could export REEs from China.

Environmental Impact of Mining Rare Earth Metals

Rare earth metals are extracted by mining - with many downsides.

Extracting even a very small amount of rare earth metals requires large areas to be mined.

The mining process can have enormous environmental impacts. Mining for rare earth metals generates large volumes of toxic and radioactive material, due to the co-extraction of thorium and uranium — radioactive metals which can cause problems for the environment and human health.

For every ton of rare earth produced, the mining process yields 13kg of dust, 9,600-12,000 cubic meters of waste gas, 75 cubic meters of wastewater, and one ton of radioactive residue. This stems from the fact that rare earth element ores have metals that, when mixed with leaching pond chemicals, contaminate air, water, and soil. Most worrying is that rare earth ores are often laced with radioactive thorium and uranium, which result in especially detrimental health effects. Overall, for every ton of rare earth, 2,000 tons of toxic waste are produced.

The Demand for Rare Earths is Exploding

During the last 15 years, the annual demand for rare-earth metals doubled reaching 125,000 tons.

By 2023, the demand for rare earth metals is projected to reach 315,000 tons.

Reasons: expanded use of green technologies and demand for more electronics. This is creating enormous pressure on global production.

In fact, up to 600 kilograms of rare-earth metals are required to operate just one wind turbine.

Will You Give Up Your iPhone?

Specific rare earth metals are used individually or in combination to make phosphors—substances that emit luminescence—for many types of ray tubes and flat panel displays, in screens that range in size from smart phone displays to stadium scoreboards.

Some rare earths are used in fluorescent and LED lighting.

Yttrium, europium, and terbium phosphors are the red-green-blue phosphors used in many light bulbs, panels, and televisions.

The glass industry is the largest consumer of rare earths raw materials, using them for glass polishing and as additives that provide color and special optical properties.

Lanthanum makes up as much as 50 percent of digital camera lenses, including cell phone cameras."

Where Do We Go From Here?

A balanced perspective is recommended.”

The amount of energy in the universe is constant.

The only constant is change.

Transition to renewable energy sources is not without a corresponding cost.

Change will bring increased volatility in commodity markets, including rare earths.

TerraManta has been pioneering and successfully applied machine learning to forecasting commodity futures since 2015.

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