Why the rare earth metals price is still growing

The price chain for rare earth metals is complex, with multiple players, business factors, supply models and geopolitical considerations at various stages of production.

Rare earth metals prices

Rare earth elements prices are rising sharply due to a decline in supply from China, the world's largest supplier of raw materials, which began a struggle against illegal mining amid a boom in "green" technologies.

Producing over than 80 percents of rare-earth metals in the world China decreases their production in order to reduce the pollution and make its huge industry more strictly controlled. Backward technologies in the rare earth extracting and producing led to a serious destruction of the environment. In some areas, excessive mining caused landslides, the formation of debris in river beds, etc. In order to solve the above problems, China will establish stricter environmental standards and pursue a policy of careful development of rare earth resources.

Actions to reduce production have already become a reason of steel and aluminum higher prices, and now it’s rare earth price index turn to experience the harmful effects of tightening regulation when demand is accelerating.

Rare earth metals price history shows that last prices growth happened in 2010-2011. The reason for that event was China provoked fears about the global deficit when it limited the exports of rares. As a result, prices fell, as producers started to seek the alternative options.

Rare earth metals price increase

According to experts from the Canadian research company, the rare earth metals price increase will facilitate the implementation of projects for their production in various regions of the world, which will put an end to the Chinese monopoly in this market.

In recent years, Chinese companies have been virtually monopoly suppliers of such rare earth metals as

• Neodymium;
• Praseodymium;
• Europium;
• Terbium;
• Dysprosium;
• Yttrium.

All they are used, in particular, in the manufacture of powerful permanent magnets used in electrical engineering and machine building. The low rare earth minerals prices led to the closure of most competing projects in Western countries and prevented the launch of new ones. However, the situation has changed now.

First of all, the Chinese authorities were able to significantly reduce the scale of illegal mining. Most rare earth metal producers in the country were combined into six large groups, which allowed the production to be put under state control.

On the other hand, consumption of metals such as neodymium and praseodymium in China this year may increase by 10% compared to the previous year and maintain such high growth rates in the future due to the intensive demand from manufacturers of electric vehicles, industrial robots and electric cars. A number of machine-building companies entered into long-term contracts with suppliers of rare earth metals, which reduced the supply on the spot market.

As a result, the price of rare earth metals have increased by more than 50% since the beginning of this year and are unlikely to significantly decrease in the foreseeable future. Thus, projects in the industry, previously considered unattractive, may again prove profitable.

 Nevertheless, the appearance of new suppliers in the world market should not lead to a drop in prices for rare earth metals due to the rapidly expanding demand for them. This sector may soon experience the same investing in rare earth metals boom as it is now observed in the lithium and cobalt markets.