Supply

China currently accounts for more than 90 percent of global rare earths supply, however international dependence on Chinese exports of rare earths started to decline in 2013 with the commencement of production in Australia/Malaysia. Additional supply from non-Chinese sources is expected to come online soon. New rare earths projects in Australia, North America and Africa should begin development over the next decade, but the long lead times for these projects mean supply of some critical rare earths, especially NdPr oxide, is likely to continue to be constrained into the future.

As has been the case for many years, future rare earths supply fundamentals will be heavily influenced by Chinese policy. The Chinese Government’s recent approach of challenging illegal rare earths mining, production, and trading, and more strictly enforcing environmental regulations, has had a noticeable effect in curtailing “swing” production that would usually come online as prices rise. In 2013, the World Trade Organisation successfully challenged China’s use of export quotas and tariffs to restrict global supply of rare earth products, and export tariffs were removed altogether. In 2016 the “Big Six” state-owned enterprises accounted for 90% of Chinese rare earth production and were again assigned official mining quotas in the first half of 2017. With greater emphasis on local governments managing and enforcing the quotas, the central government is hoping to further reduce or eliminate the practice of illegal rare earths mining.

Overall, continued reduction in illegal production, better implementation of material tracking schemes and greater environmental regulation has ensured better control of Chinese supply in recent times. Some major Chinese producers have also been stockpiling rare earths in anticipation of higher prices, placing further constraints on overall supply in the marketplace. This would be released during a tight market.

Going forward, total Chinese supply from mining is expected to be stable, with no expectation that the government will increase mining quotas/extend mining licences.

Demand

In 2016, global consumption of rare earth oxides (REOs) was approximately 137,000 tonnes, with China representing 60-70% of demand, followed by Japan at 15-20%. Demand for some rare earths remained weak in 2016 due to structural changes and substitution, whilst demand for rare earths linked to renewable energy applications grew strongly.

Based on data sourced from an internal supply and demand model, using data collated from various analysts, suppliers, and official government sources, the growth outlook for the rare earths sector continues to look encouraging, with a compound annual growth rate of 5-6 % forecast through to 2025, lifting the size of the total market of approximately 215,000 tonnes a year.

The neodymium-iron-boron magnet sector is the largest in terms of rare earths consumption. Customers in this sector are predominately consuming NdPr Oxide through conversion to Magnet Alloy.

The fluid catalytic cracking (FCC) catalyst sector is the second largest in terms of rare earths consumption, with lanthanum and cerium the key products. The increasing focus on limiting automotive emissions is expected to drive strong demand for cerium carbonate for use in catalytic applications.

Cerium demand is also expected to be driven by consumers seeking to use the rare earth in polishing glass and display panels, which is the third biggest application.

RE Segment Market Size CAGR to 2025 Market Share
Magnets 36,832 8% 27%
Catalysts 28,962 6% 21%
Phosphors 9,652 -2% 7%
Polishing Powders 15,917 4% 12%
Metal Alloys 14,527 4% 11%
Batteries 12,495 1% 9%
Glass Additives 11,153 3% 8%
Other 7,749 5% 6%
Total 137,287 5% 100%